Purchasing Power Calculator
What a sum is really worth after inflation — in both directions.
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Purchasing Power Calculator
What a sum is really worth after inflation — in both directions.
- What it still buys (today's prices)
- What you would need to match it
How the purchasing power calculator works
Inflation does not shrink the number in your account — it shrinks what that number buys. A projection that ends at 1.5 crore in twenty years sounds like a comfortable retirement until you ask what 1.5 crore will actually purchase by then. This calculator answers that in both directions from a single figure: real value = amount ÷ (1 + inflation)^n tells you what a future sum is worth in today’s money, and amount × (1 + inflation)^n tells you what you would need later to match what you have now.
How to Use: 1. Enter an "Amount" — a target you are saving towards, or a figure another calculator gave you. 2. Set an "Expected inflation" rate, or pick one of the presets. Headline CPI is the wrong rate for most goals: education and healthcare have run persistently above it, so a school fee or a hospital bill should not be planned at the general rate. 3. Choose the "Time period" in years.
Understanding the Results: "Real purchasing power" is what that sum buys once prices have moved — the honest size of the plan. "Value lost" is the gap between the nominal figure and that real value; the money does not leave the account, the buying power does. "Amount needed" runs it backwards, and is usually the figure worth planning against, because it is the target a SIP or savings calculator should be aimed at. The curve is drawn one year at a time because the shape matters: erosion is gentle early and then accelerates, since inflation compounds in exactly the way returns do.
The formula
Real value = amount ÷ (1 + inflation)^n
Amount needed later = amount × (1 + inflation)^n
- n: the number of years
The first answers what a future sum is worth in today’s money; the second, what you will need later to match what you have now.
A worked example
At 6% inflation, ₹1,00,000 in 20 years buys what about ₹31,180 buys today. To match the buying power of ₹1,00,000 today, you would need about ₹3,20,714 then.
Questions people ask
How does inflation reduce purchasing power?
It does not shrink the number in your account; it shrinks what that number buys. Real value = amount ÷ (1 + inflation)^years, so at 6% inflation a sum loses about half its buying power in 12 years.
What is 1 crore worth in 20 years?
At 6% inflation, 1 crore rupees in 20 years buys what about 31 lakh rupees buys today. Put the other way, to match 1 crore today you would need about 3.2 crore in 20 years.
Which inflation rate should I use?
The general rate for everyday spending, and a higher one for education and healthcare, which have tended to rise faster than headline inflation. A goal in those areas should be planned at its own rate.
Related calculators
- Retirement Calculator: Estimate the retirement corpus you need and the monthly saving required to get there, adjusted for inflation and returns.
- Goal SIP Calculator: Know the exact monthly SIP needed to reach a target amount. Set your goal, timeline and expected return — the calculator does the rest.
- SIP Calculator: Free SIP calculator: see how a monthly mutual-fund SIP compounds over time, total invested vs. projected value, and plan your SIP in seconds.
Further reading
Estimates are for illustration only and assume constant returns. Actual returns vary with market conditions. This is not investment advice.