How this calculator works
Inflation compounds: the same annual assumption is applied to each year, so longer periods create a larger cumulative change.
- Step 1Choose a period10 yearsUse a whole number of years.
- Step 2Apply inflation6% each yearThe entered rate compounds annually.
- Step 3Read the amount₹1,79,085An illustrative future cost for the default price.
The rate is an assumption you supply. This page does not fetch Consumer Price Index (CPI) data, infer a rate from past prices or predict future inflation.
Formula
The inflation factor is 1.7908× for the default assumptions. To project a price, multiply it by (1 + annual inflation rate) raised to the number of years. To adjust a future amount to today, divide by the same factor.
For a future amount, divide it by the same factor to estimate its value in today’s money.
Real return compares nominal return with inflation using ((1 + nominal rate) ÷ (1 + inflation rate) − 1) × 100. This is exact, rather than the approximation of subtracting the two percentages.
What the result leaves out
- Changing ratesOne constant annual rate is used for every year.
- Actual CPI or personal costsNo index series or household spending basket is used.
- Taxes and feesThese are outside the calculation.
Worked example
- Annual compounding
future cost = current price × (1 + annual rate)ʸᵉᵃʳˢ- Today’s value
today’s value = future amount ÷ (1 + annual rate)ʸᵉᵃʳˢ
- Inflation factor(1 + 6%)^101.7908×
- Estimated future cost₹1,00,000 × 1.7908₹1,79,085
- Discounted to today₹1,79,085 ÷ 1.7908₹1,00,000
Reading your result
Discounting ₹1,79,085 by the same factor returns about ₹1,00,000 in today’s money.
This is a mathematical illustration, not a forecast. The entered rate may not match future consumer prices or any one household’s experience.
Using it with other plans
Any long-term target in rupees needs an inflation view: the same goal costs more each year you wait.
Work out a goal’s future cost here, then find the monthly saving it needs with the goal planner or the SIP calculator. The retirement planner builds rising expenses into the corpus it estimates.
A pay rise only adds buying power if it beats inflation; the salary hike calculator shows the real hike. To measure an investment’s actual growth rate before comparing it with inflation, use the CAGR calculator.
Common mistakes
Mistake: Treating an assumed rate as a forecast.
Instead: Try alternative rates and treat each result as a scenario.
Mistake: Reading a future rupee amount as today’s purchasing power.
Instead: Use Today’s value mode to discount it by the same assumed rate.
Mistake: Subtracting inflation from nominal return as if that were exact.
Instead: Use Real return mode, which uses the ratio of the two growth factors.
The calculations use annual compounding and your chosen assumptions. Verify figures independently before making financial decisions. This calculator is for education only and is not investment, tax or legal advice.
Checking the method
A separate script recomputes every test case two ways, by formula and one year at a time, and they must agree.
Read how we test our calculators, or browse more money calculators.