PocketInflation Calculator
See how inflation erodes the value of your money. Calculate what a specific cash amount will be worth in the future, or what future costs will look like.
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Future Equivalent Cost
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Purchasing Power Value today
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Lost Value of Money
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Erosion of Purchasing Power Over Time
Inflation Compounding Formula
Inflation compounds annually. The formulas used are:
- Future Cost (Value of goods): Future Value = Current Value × (1 + inflation rate)tenure
- Purchasing Power (Value of money): Present Value = Current Cash / (1 + inflation rate)tenure
Worked Example
If you have ₹1,00,000 today, and inflation averages 6.0% p.a. over 15 years:
- To buy the same basket of goods in 15 years, you will need: ₹2,39,656
- Your ₹1,00,000 cash will purchase only what ₹41,727 does today.
- Lost value of cash: ₹58,273 (58.3% drop in purchasing power)
Frequently Asked Questions
What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, subsequently causing purchasing power of currency to fall.
What is average inflation rate in India?
Historically, CPI inflation in India averages between 5% and 6.5% annually over the last two decades.
How can I protect my money against inflation?
To beat inflation, you must invest in assets that offer return rates higher than inflation (like Equities or Real Estate which yield 10-15%). Fixed bank deposits and cash usually yield negative real returns after adjusting for tax and inflation.
What is the 'Real Rate of Return'?
The Real Rate of Return is the nominal return rate minus the inflation rate. If your mutual fund earns 12% but inflation is 6%, your real rate of return is approx 6%.
What is the CPI index?
CPI stands for Consumer Price Index. It tracks the average retail prices of a representative basket of essential goods and services consumed by households, and is used to measure inflation.