Guide
Understanding the Inflation Calculator
Inflation is the slow rise in prices that makes the same rupee buy less over time. This guide explains how the inflation calculator works and why it matters for every goal. Figures are illustrations.
What is inflation?
Inflation is the general rise in the cost of goods and services. A cup of tea, school fees and a flat all cost more than they did a decade ago.
Because it works quietly year after year, inflation can shrink the value of money kept idle.
How to use this calculator
- 1
Enter today's cost
Use the price of the item or expense today.
- 2
Set the number of years
Choose how far ahead you want to look.
- 3
Choose an inflation rate
Try more than one rate to see how sensitive the result is.
- 4
Read the future cost
Use the result as your goal amount in the SIP or goal calculator.
How inflation compounds
Prices rise on top of the previous year's higher prices, just as investments compound. At an assumed 6% a year, a ₹1 lakh expense today becomes roughly ₹2.4 lakh after 15 years.
A handy shortcut: divide 72 by the inflation rate to estimate how many years it takes for prices to double. At 6%, that is around 12 years.
Why it matters for your goals
Any goal in the future, whether college, a wedding or retirement, will cost more than today's price. Ignoring this is the most common reason that goals fall short.
It also affects how you think about returns. What matters is the return after inflation, not just the headline number.
Using the result
Use the future cost as the target when you work out your SIP. Your own inflation can differ from the national average, since education and healthcare often rise faster than other items.
- Test a couple of rates to see the range.
- Update the figure when actual costs change.
Frequently asked questions
What does the inflation calculator show?
It estimates what a cost today could be after a number of years at the inflation rate you choose.
Which inflation rate should I use?
Try a few values. Education and healthcare often rise faster than general prices, so use a higher figure for those.
Is future inflation predictable?
No. The calculator uses an assumption, and actual inflation will vary.
How does inflation affect my savings?
If your savings grow slower than prices, their buying power falls even though the balance rises.
Can I use it to think about salary growth?
Yes, you can see how much your income needs to grow to keep the same lifestyle, though it cannot predict actual raises.
What is the 72 rule?
Dividing 72 by a rate gives a rough number of years for something to double at that rate. It is an approximation.
All figures in this guide are illustrations based on assumptions, not forecasts. Mutual fund investments are subject to market risks. Read all scheme-related documents carefully.