What inflation rate should I use?

Around 6% for general expenses in India. But use category rates for specific costs: roughly 10% for private education, 8 to 10% for healthcare, and somewhere between for urban housing. Electronics have actually got cheaper.

Why does inflation matter so much to a long-term plan?

Because it compounds against you. At 6% prices double about every 12 years, so a 24-year plan faces roughly four times today's costs. Setting a goal in today's prices and saving to that figure is the most common planning error.

What is a real return and why is mine lower than I thought?

It is what is left after inflation, and it is the only return that matters. A 7% deposit with 6% inflation earns under 1% real, and after 30% tax it is negative — the balance grows while buying less. Equity at 12% with 6% inflation gives about 5.7% real.

Why is education inflation treated separately?

Because it has run around 10% a year, well above headline inflation, and the costs arrive on a schedule you cannot postpone. At 10% costs double about every seven years, so a ₹20 lakh degree is nearer ₹80 lakh in fourteen years.

Does my salary keeping pace with inflation mean I am fine?

It means you are standing still, not getting ahead. A 5% raise when inflation is 6% is a pay cut. Since average raises are 8 to 10%, most people gain some real ground — the key is directing the above-inflation part into investments rather than lifestyle.

What actually protects money from inflation?

Assets whose value rises with prices: broad equity above all, plus property through rent, and gold over very long periods. Cash, savings accounts and after-tax fixed deposits do not. Short-term money belongs somewhere safe; money needed in a decade needs inflation-beating assets.

Can I use this for past years or negative inflation?

Yes. Read backwards it converts past amounts into today's money, which explains why old salaries and prices look deceptively small. A negative rate models deflation, which is rare overall but real in categories like electronics and telecom.

Why does my own cost of living rise faster than the official figure?

Because CPI averages a national basket weighted towards food, fuel and rural spending, while your basket may be dominated by rent, school fees, healthcare, help and travel. Urban households often run two to four points above headline. Estimate your own rate from your biggest expenses.

PlanningUpdated August 1, 2026

Inflation Calculator

See what today's money will cost in future, what a future amount is worth in today's terms, and how much purchasing power inflation removes along the way. Includes category presets for education, healthcare, housing and lifestyle, and the real return your investments are actually earning.

How to use this calculator

Step 1
Enter an amount
A monthly expense, an annual cost, or a target you are saving towards.
Step 2
Pick an inflation rate
Use the general rate, or choose a category preset — education and healthcare run well above headline inflation.
Step 3
Set the horizon
How many years forward you want to look.
Step 4
Read it both ways
What the same thing will cost, and what your money will buy. Add a return to see the real rate you are earning.

Quick facts

Direction: Future cost and today's value
Presets: Education, healthcare, housing, lifestyle
Real return: Fisher relation, not simple subtraction
Compounding: Annual

What inflation does to your money

Enter an amount you spend or hold today, and see both what it will cost later and what it will still buy.

Currency

Amount today

Adjust amount

$1,000$500,000

Inflation rate

Pick a spending category for an indicative rate, or type your own.

Spending category

Broad consumer basket. India's target band centres on 4%.

Annual inflation

Adjust rate

0%15%

Over how long

Time period

yrs

Adjust period

1 yr40 yr

Prices multiply 4.29× over 25 years, so $50,000 of spending becomes $214,594.

Rates are assumptions, not forecasts. Inflation is volatile year to year and varies widely by category.

The same spending in 25 years

$214,594

Buying exactly what $50,000 buys today will cost this much, at 6% a year.

4.29×the price of the same basket

Costs today: $50,000
Extra you will need: $164,594

Put another way, you need $164,594 more just to stand still.

What $50,000 will buy

$11,650

Held in cash for 25 years, this is what it would still be worth in today's terms.

Purchasing power lost: $38,350
Share of value gone: 77%

Money halves in value every

11 yrs 11 mo

At 6%, cash loses half its buying power in this time.

Return needed to break even: 6%

Anything earning less than this loses ground in real terms, however positive the statement looks.

Both numbers describe the same erosion

Prices rising to $214,594 and $50,000 falling to $11,650 of value are two views of one thing. Quoting only the first makes inflation look survivable; quoting only the second makes it look catastrophic. Plan against both.

Inflation compounds in exactly the way investment returns do. That is why beating it is not optional over long horizons — holding cash is a decision to lose 77% of your purchasing power over 25 years.

The scissors close from both sides

One line is what the same basket costs. The other is what today's money still buys. They diverge from the same starting point.

The gap between the two lines at any point is the full cost of inflation over that period.

The same $50,000 across spending categories

What it costs after 25 years, at each category's indicative long-run rate.

Category inflation routinely outruns the headline figure, which is why one rate cannot size every goal.

Watch purchasing power drain away

Press play to see the same amount of money quietly buy less each year.

Purchasing power eroding6% a year for 25 years

Today25 years25 years

Cost after 25 years

$214,594

You would need $164,594 more than today for the same basket.

What today's money still buys: $11,650
Purchasing power lost: 77%
Price multiple: 4.29×

Jump to a milestone

Both figures move together, because a rising price and a shrinking rupee are the same event seen from two sides.

AdvertisementAd slot: inflation-calculator-mid

How inflation is calculated

Inflation is compound growth applied to prices. The same relationship read forwards gives the future cost of something; read backwards it gives what a future amount is worth today.

Future cost = Present cost × (1 + i)ⁿ

Annual inflation rate

As a decimal, so 6% is 0.06.

Number of years

The horizon you are looking across.

Purchasing power

Value in today's money

Amount ÷ (1 + i)ⁿ — what a fixed future sum actually buys.

Real return

Growth above inflation

((1 + nominal) ÷ (1 + inflation)) − 1, which is what your money genuinely gains.

Doubling time

Years for prices to double

Approximately 72 ÷ the inflation percentage.

The real return deserves care, because the intuitive subtraction is wrong in a way that matters over long horizons. An 8% return with 6% inflation is not a 2% real return but 1.887%, since the return has to grow the money and cover the higher price level at the same time. Over 30 years that apparently trivial difference compounds into roughly a 3% gap in the final purchasing power, and the error grows as both rates rise.

Assumptions

Inflation is applied at a constant annual rate. Real inflation varies year to year, sometimes sharply.
Compounding is annual, so the amount steps up once each year rather than continuously.
The category presets are long-run averages for India and are indicative, not official figures.
Your personal inflation rate is what matters, and it depends entirely on what you buy. Headline CPI is an average across a basket that may not resemble your spending.
Real return is calculated with the Fisher relation rather than by subtracting inflation from the return, which slightly overstates the result.
No tax is applied. Tax is deducted before inflation bites, so a taxable return has to clear both hurdles.

Frequently asked questions

Answers about the inflation calculator.

For general expenses, 6% is a sensible long-run assumption for India — headline CPI has averaged around 5 to 6% over the past decade, with periods well above and below. But the headline number is an average across a basket that probably does not match your spending, and the categories that matter most in a life plan inflate faster. Private education has historically risen around 10% a year, healthcare around 8 to 10%, and urban housing and domestic help somewhere between. Consumer electronics have actually fallen in real terms. The practical approach is to use the category preset that fits the specific expense you are modelling rather than one rate for everything, and to use the general rate only for a mixed household budget.

Related calculators

Continue exploring adjacent tools in this topic.

Guides that explain this

Background reading on the ideas behind these numbers.

Investing

Why compounding rewards patience more than timing

The arithmetic of long-horizon investing is lopsided: the final decade of a thirty-year plan produces more wealth than the first twenty years combined. Here is why duration beats cleverness, and what that means for when you start.

Jul 24, 20268 min read

This tool is provided for educational purposes only. Results are estimates based on the values you enter and do not constitute financial advice.

Assumptions

Inflation is applied at a constant annual rate. Real inflation varies year to year, sometimes sharply.

Compounding is annual, so the amount steps up once each year rather than continuously.

The category presets are long-run averages for India and are indicative, not official figures.

Your personal inflation rate is what matters, and it depends entirely on what you buy. Headline CPI is an average across a basket that may not resemble your spending.

Real return is calculated with the Fisher relation rather than by subtracting inflation from the return, which slightly overstates the result.

No tax is applied. Tax is deducted before inflation bites, so a taxable return has to clear both hurdles.