Inflation Value
What is Inflation?
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. If the inflation rate is 6%, a loaf of bread that costs ₹100 this year will cost ₹106 next year.
This calculator helps you understand the future value of your money or how much an item from the past would cost today.
Compound Inflation Formula
Inflation compounds over time, similar to compound interest. We use the standard Future Value formula:
FV = PV × (1 + (r / 100))^nWhere:
FV: Future Value (New Price)
PV: Present Value (Current Amount)
r: Inflation Rate (%)
n: Number of Years
Why It Matters
- Savings: If your bank interest rate is lower than inflation, you are effectively losing money.
- Retirement: You will need significantly more money in the future to maintain your current lifestyle.
- Investments: Your investments must beat inflation to generate real returns.
FAQ
What is a "good" inflation rate?
Most central banks target an inflation rate of around 2-3%. This is considered healthy for economic growth. Deflation (negative inflation) can be just as bad for an economy.