Inflation Calculator
Inflation Details
Inflation Calculator
Inflation is an indicator of the rate of price change when compared to a specific category of goods over a particular period. Inflation signifies the elevation in the prices of goods/services that denotes a fall in purchasing capacity.
What is Inflation?
Inflation is a rise in price levels of goods/services that are required for day-to-day use. It primarily indicates the fall in the purchasing capacity of the rupee.
There are mainly 2 measures of inflation:
- Consumer Price Index (CPI) – calculates retail-level changes in price
- Wholesale Price Index (WPI) – calculates wholesale-level changes in price
How Does Inflation Affect Your Savings?
Every investor makes his savings and investments with the sole intent of growing their money over time to fund future financial needs. However, external factors like inflation may reduce savings by diminishing an individual's purchasing power.
Bank interest may not always offset inflation, and the impact largely depends on the type of investment. Returns may vary depending on inflation levels.
What is an Inflation Calculator?
An inflation calculator estimates the effect of inflation on an individual's purchasing power. It indicates the worth of a sum of money after a certain period and can also project the value if the money is invested.
Benefits of Inflation Calculator
- Free to Use at Ease –Our inflation calculator is free to use and can be run multiple times.
- Precise Output and Results – This calculator helps assess the potential worth of money in the future, including its value if invested. Historical rates are used for accurate results.
- Simple to Use – Just enter the money amount to calculate its purchasing power in future years.
- Time-saving – The inflation-adjusted calculator delivers results in seconds, much faster than manual calculations.
How is Inflation Calculated?
In this calculator, inflation is projected using the formula:
Where:
- FC = Future Cost of the item after the specified number of years
- CC = Current Cost of the item today
- R = Annual inflation percentage rate
- T = Number of years in the future
This shows how prices of goods/services increase over time based on the specified inflation rate.