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Inflation
What is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises, leading to a fall in the purchasing power of currency. In simple terms, your money buys you less than it did before. This calculator helps you see that effect over time.
Future Value vs. Past Value
Future Value: This calculates what a specific amount of money today will be worth in the future, given a steady inflation rate. It helps you understand how much you'll need in the future to maintain the same purchasing power.
Past Value: This calculates what a specific amount of money today was worth in the past. It shows how the purchasing power of money has decreased over time due to inflation.
Why is the Inflation Rate important?
The inflation rate is a crucial economic indicator. For personal finance, it helps you understand how much your savings might devalue over time if their growth doesn't keep pace with inflation. It's essential for realistic retirement planning, investing, and setting long-term financial goals.
Is this calculator 100% accurate?
This calculator provides an estimate based on a *fixed average* annual inflation rate. In the real world, inflation rates fluctuate constantly based on economic conditions, government policy, and global events. This tool is for educational and planning purposes, not as a precise financial forecast.
How to Use This Calculator
There are two main ways to use this tool:
- Calculate Future Value: See what a certain amount of money today will be worth in the future, assuming a constant inflation rate. This shows you how much you'll need in the future to have the same purchasing power as today.
- Calculate Past Value: See what a certain amount of money today would have been worth in the past. This shows you how much the value of money has grown (or inflated) over time.
What is Purchasing Power?
Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Inflation erodes purchasing power.
For example, if you calculate Future Value, the "Purchasing Power" result shows what your *original amount* (e.g., ₹100,000) will be able to buy in the future.