Inflation Calculator

The Inflation Calculator helps you easily track how purchasing power changes over time by considering inflation rates. Simply enter the amount and years to see how inflation impacts money's value, enabling you to make informed financial decisions. Use this inflation calculator to better understand economic shifts and plan your budget more effectively.

Latest Inflation Update:

The Reserve Bank of India (RBI) released an expected inflation, as measured by the Consumer Price Index (CPI), to average around 3.7% for the financial year 2025–26. The quarterly breakdown is:

• 2.9% in April–June (Q1).
• 3.4% in July–September (Q2).
• 3.9% in October–December (Q3).
• 4.4% in January–March (Q4).

Although these numbers appear stable, inflation still means that prices are gradually rising, which can erode the purchasing power of your money over time.

That’s why using an inflation calculator can be helpful. It shows you how inflation affects the value of your money, helping you plan better for the future. By understanding this, you can make more informed financial decisions to protect your savings and investments from losing value.

What is the Inflation Calculator?

An inflation calculator is a financial tool that helps you understand how the value of money changes over time due to inflation. By entering an amount of money, a base year, and a target year, the calculator displays the value of that amount in today's terms or in the future, taking into account inflation. 

This helps you measure the real purchasing power of your money across different time periods, making it useful for budgeting, investment planning, and setting long-term goals.

Why Inflation Calculator Used for?

An inflation calculator is used to understand how the purchasing power of money changes over time, helping users to plan for future expenses by estimating the future cost of goods and services. It shows how much a specific amount of money today would be worth in the future, or how much it will cost to maintain a certain lifestyle, which is vital for long-term financial planning, retirement planning, and evaluating investment needs.

How to use the Inflation Calculator?

Using the inflation calculator and understanding how inflation can affect your overall savings is very easy. To use the calculator, follow the steps below:

• Step 1: Enter the value of the current expenses.
• Step 2: Mention the inflation rate percentage. It should be the current rate.
• Step 3: Enter the period in years for which you want to understand the future price.
• Step 4: The calculator will display the exact amount based on the information you entered.

You can even use it as an inflation calculator by year to understand how the prices will change.

Formula to Calculate Inflation

To understand how an inflation calculator works, you need the Consumer Price Index (CPI) values for two different time periods. These values allow you to calculate the inflation rate using the formula:

Inflation Rate = [(CPI in Year 2 – CPI in Year 1) / CPI in Year 1] × 100

Let’s apply this using RBI’s projected CPI data.

Assume the CPI for 2024–25 is 100 (base value), and for 2025–26 it is expected to rise by 3.7% (based on RBI’s average projection for 2025–26).

That means the CPI in 2025–26 will be:

CPI in 2025–26 = 100 + (3.7% of 100) = 103.7

Now applying the formula:

Inflation Rate = ((103.7 – 100) / 100) × 100 = 3.7%

This confirms that with a 3.7% increase in CPI, the inflation rate is 3.7%. 

How to Calculate Future Value

You can use the future value calculator or the formula below to calculate this value. This value is the value of a particular asset in the future on a specific date based on a certain growth rate. 

The formula for calculating future value is FV = PV*(1+i)^n

Where,

• PV = present value of the goods
• I = interest rate
• N = number of periods

Let’s understand how to calculate this value using an example:

Let’s assume Ajay holds an asset and wants to know its value in the future. The following components are required.

• PV = 2,50,000
• I = 12%
• Time period = 5 years

So, FV = 2,50,000*(1+12%)^5 = 4,40,585

Benefits of the Inflation Calculator

There are many advantages to using an inflation calculator. Let’s look at some of its benefits below:

• Preparing for rising costs: Helps plan for future expenses by illustrating how inflation impacts purchasing power, facilitating better financial planning.
• Informed decisions: Provides insights into how inflation impacts savings and investments, supporting smarter budgeting and planning.
• Evaluates returns: Assesses real investment returns by factoring in inflation, helping choose better-performing options.
• Educational tool: Simplifies inflation concepts, improving financial awareness and money management.

Inflation Rate in India for the Last 10 Years

The table below represents the Indian inflation rate from 2014-2024:

Let's conclude by saying the inflation calculator is a practical tool that helps individuals and businesses plan for future cost increases, make informed financial decisions, and evaluate the real returns on investments. By understanding inflation’s impact, you can better manage your finances and secure your financial future.