Inflation Calculator
An inflation calculator helps you understand how the value of money changes over time due to inflation. It estimates how much money you would need in the future to have the same purchasing power as a given amount today.
The result is not an investment return or profit. Instead, it answers a practical question: “If something costs this much today, how much would I need to afford the same thing after inflation?”
How the Calculation Works
Inflation reduces purchasing power gradually over time. When prices rise each year by a certain percentage, the same amount of money buys fewer goods and services in the future.
The calculator applies the selected annual inflation rate to the current value for the chosen time period. The future value shown represents the inflated equivalent — the amount required in the future to match today’s value.
- Inflation rate is assumed to remain constant
- Inflation compounds year over year
- No income growth or investment returns are included
Inputs and Options Explained
The calculator uses three inputs that together describe how inflation affects purchasing power over time.
- Current Value — The amount of money today whose future purchasing power you want to estimate.
- Annual Inflation Rate (%) — The average yearly rate at which prices are expected to rise.
- Time Period (Years) — The number of years over which inflation is applied.
Understanding the Result
If the calculator shows that ₹100,000 today becomes ₹179,000 in ten years, it does not mean your money grows to that amount. It means that prices may rise such that you would need ₹179,000 in the future to afford what ₹100,000 buys today.
This distinction is important. Inflation works quietly, but over long periods it has a significant impact on savings, salaries, and long-term financial goals.
Who Should Use This Tool
This calculator is useful for anyone planning for the future and wanting to account for the effect of rising prices.
- Individuals planning long-term financial goals
- People evaluating future expenses like education or retirement
- Anyone comparing nominal vs real value of money
Related Concepts
Inflation is closely tied to several financial ideas that help explain how money behaves over time.
- Purchasing Power — The quantity of goods and services money can buy.
- Real Value — Value adjusted for inflation, as opposed to nominal amounts.
- Compounding — The cumulative effect of small annual changes over time.
To see whether your investments are outpacing inflation, you can also use a CAGR Calculator or estimate future investment outcomes with a Lumpsum Calculator.