If invested in SIP at this return — compare with inflation impact.
💸 Inflation Impact
TODAY
₹1L
Purchasing power now
IN 10 YEARS
₹55,839
Real value after inflation
💸 Purchasing Power Lost
₹44,161
44.2% of your money's value destroyed by inflation
Inflation rate6% p.a.
Value needed in future to match today—
If invested @ 12%—
Investment beats inflation by—
Money doubles every—
📊 Year-by-Year Purchasing Power Erosion
Remaining valueLost to inflation
🛒 What Things Will Cost — Real Indian Examples
Prices calculated at your selected inflation rate. Actual prices may vary.
Inflation in India — Why Your Money Shrinks
India's Consumer Price Index (CPI) inflation averaged around 5-6% over the last decade. But specific categories are much worse — education costs rise 10-12% yearly, healthcare 8-10%, and food 7-8%. This means ₹1 lakh in 2026 will only buy what ₹55,000 buys today, in 10 years.
The real danger: If your salary grows at 8% but inflation is 6%, your real income growth is only 2%. If your money sits in a savings account earning 3.5%, you're actually losing 2.5% in purchasing power every year!
How to beat inflation: Equity mutual funds (SIP) have historically returned 12-15% annually in India — beating 6% inflation by 6-9% per year. This "real return" compounds powerfully over time. Even a modest 10% return beats inflation by 4% per year.
India's CPI inflation in early 2026 is approximately 4.5-5.5%. RBI targets 4% inflation with ±2% tolerance band. Food inflation tends to be higher (6-8%), while core inflation (excluding food and fuel) is around 4%. Use 6% as conservative assumption for long-term planning.
How does inflation affect savings?▼
At 6% inflation, ₹1 lakh today buys only ₹55,839 worth of goods in 10 years. Your savings account earning 3.5% means you're LOSING purchasing power by 2.5% annually. To beat inflation, invest in assets returning above 6% — equity mutual funds (10-12%), PPF (7.1%), or even FD (7%+).
What is the inflation formula?▼
Future value = Present value × (1 + inflation rate)^years. Example: ₹1 lakh today at 6% inflation: Year 5 = ₹1,33,823, Year 10 = ₹1,79,085, Year 20 = ₹3,20,714. Equivalently, to maintain ₹1L purchasing power in 10 years, you need ₹1.79L.
Inflation Calculator India — Real Value of Money Over Time
India's average inflation rate has been 5-7% per year over the past decade. This means ₹1 lakh today will be worth only ₹61,000 in purchasing power after 10 years at 5% inflation. Our inflation calculator shows how much money you need in the future to match today's purchasing power, and how much your current savings will be worth in real terms. Essential for retirement planning — you need to earn more than inflation to build real wealth.
Inflation's Impact on Your Investments and Savings
A savings account at 3.5% interest with 6% inflation means you're losing 2.5% purchasing power every year. Even FD at 7% with 6% inflation gives only 1% real return (after tax: negative!). To beat inflation, you need equity investments. Nifty 50 index has given 13-14% CAGR historically — that's 7-8% real return after inflation. This is why investing in equities (mutual funds, stocks) is essential for long-term wealth preservation.
How Inflation Affects Retirement Planning
Retirement planning must account for inflation. If you need ₹50,000/month today, at 6% inflation you'll need ₹89,542/month in 10 years and ₹1,60,357/month in 20 years. This is why your retirement corpus target must be much larger than you think. A ₹1 crore corpus at 60 sounds like a lot but at 6% inflation and 8% withdrawal rate, it lasts only 20 years. Target ₹3-5 crore for comfortable retirement — use our retirement calculator to plan yours.
Frequently Asked Questions
What is India's inflation rate in 2026?▼
India's CPI (Consumer Price Index) inflation in 2026 is approximately 4.5-5.5%, with food inflation slightly higher at 6-7%. RBI targets 4% inflation (with 2% tolerance band). Urban inflation is lower than rural due to different consumption baskets. Use 6% as a conservative assumption for long-term financial planning.
How does inflation affect fixed deposits?▼
At 7% FD rate with 6% inflation: real return = 1%. After 30% tax on FD interest: real return = -0.9% (negative!). This is why pure FD investment doesn't build wealth — it barely preserves it. Combine FD (for safety/liquidity) with equity investments (for growth) for optimal portfolio.