Calculate how inflation affects the future cost of living and the real value of your money using expected or historical CPI rates.
Detailed annual schedule of price growth and real value erosion
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.
Price levels & currency purchasing power
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.
Impact on bank returns & wealth accumulation
Strategic planning & inflation-beating portfolio diversification
Inflation has an inevitable presence in the economy. Though the government attempts to control it via fiscal policies, certain risks and effects are beyond its control. Hence, an individual must prepare well in advance to combat inflation conditions.
With careful investments and effective financial planning that offers inflation-beating returns, one can achieve so. For example, investing in stocks and mutual funds provide reasonable returns. It has been observed over the years that the returns from such investments have been higher than the inflation rate. However, it is important to note that the risk associated with these investments can also lead to incurring losses.
Therefore, by diversifying the portfolio and picking the right basket of investments that provide substantial returns in the long term, one can potentially expect to endure inflation without much hardship.
Purchasing capacity & investment projections
An inflation calculator calculates the effect of price changes on the purchasing power and capacity of an individual. It estimates future money values and necessary investment return targets.
CPI & WPI Price Measurement Methodology
Inflation signifies the elevation in prices of goods and services over time, denoting a fall in purchasing capacity. It is calculated primarily using two official price measures:
Calculates retail-level price changes paid directly by consumers for daily household goods & services.
Calculates wholesale-level price variations traded between businesses before reaching retail markets.
Inflation is the gradual decrease in the purchasing power of money, meaning the same amount of money buys fewer goods and services over time.
Your real rate of return is your nominal investment return minus the inflation rate. If your returns do not exceed inflation, your real wealth decreases.
Like compound interest, inflation compounds exponentially. At a 6% annual inflation rate, prices double roughly every 12 years.
Growth assets like equities, real estate, and inflation-indexed bonds help preserve purchasing power compared to idle cash in savings accounts.
Quick answers about how this tool works.
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