What is purchasing power?

Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Inflation decreases purchasing power over time, meaning that the same amount of money will buy you fewer things in the future than it does today.

Is the inflation rate always the same?

No, the inflation rate is not constant. It fluctuates year to year based on economic factors like supply and demand, government policies, and global events. This calculator uses a constant average annual inflation rate for simplicity. For precise historical calculations, you would need to use the specific inflation rate for each year.

What is a good average inflation rate to use for India?

Historically, India's average inflation rate (based on the Consumer Price Index - CPI) has been around 6-7%. Using a rate in this range for future projections is a reasonable starting point, but it is only an estimate. You can adjust this rate based on your own research and risk perception.

Inflation Calculator

See how the value of money changes over time due to inflation.

Calculation Details

Amount (₹)

Start Year

End Year

Avg. Annual Inflation Rate (%)

Enter details to see the result.

Share this calculator

About the Inflation Calculator

Understanding the impact of inflation on your money.

What is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises, leading to a fall in the purchasing power of currency. In simple terms, your money buys you less than it did in the past. For example, if the annual inflation rate is 7%, then a product that costs ₹100 this year will cost ₹107 next year. This calculator is a vital tool for understanding this "silent tax" and its long-term effect on your savings and investments.

How This Calculator Works

This calculator determines the future or past value of money based on an average inflation rate. The calculation uses the formula for future value based on compound growth: `FV = PV * (1 + r)^n`, where 'FV' is the future value, 'PV' is the present value (your initial amount), 'r' is the annual inflation rate, and 'n' is the number of years. By providing the initial amount, the start and end years, and an average inflation rate, you can project the equivalent value of that money at a different point in time.

Frequently Asked Questions

Practical Applications

Retirement Planning: A crucial application. Understand how much your target retirement corpus (e.g., ₹2 crore) will actually be worth in terms of today's purchasing power when you retire in 20 or 30 years. This helps you set a more realistic savings goal.
Goal Setting: If you're saving for a long-term goal like a child's education that costs ₹20 lakhs today, you can use the calculator to estimate what that same education might cost in 15 years, ensuring you save enough.
Historical Perspective: Gain insight into economics by seeing what an amount of money from the past (like your first salary or the price of a car 20 years ago) would be equivalent to today.

Note: This calculator uses a constant average inflation rate for its calculation. In reality, inflation rates fluctuate year to year. This tool is for educational and estimation purposes only and should not be considered financial advice.