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Inflation calculator

  

World Bank annual CPI (FP.CPI.TOTL). Forward mode uses one flat rate.

Question

Enter the number of years.

Value

…

Loading CPI data from the World Bank.

What inflation does to money

Inflation is the rise in the general price level. Statistics offices track it with a consumer price index (CPI), the cost of a fixed basket of goods and services. The tool compares the World Bank's annual average CPI for two years. If the index doubled, ₹100 in the earlier year buys what ₹200 buys in the later one. National series can differ a little from the World Bank figures, and the latest year is often a year or two behind.

For the future, the tool uses one flat rate that you choose. The Reserve Bank of India targets 4% CPI inflation, with a band of 2% to 6%. The US Federal Reserve and the European Central Bank both aim for 2%. Over 20 years at 6%, prices rise about 3.2 times, so ₹1 lakh then buys what about ₹31,000 buys today.

This matters for any long-term goal. A retirement corpus or a SIP target should be in future money, not today's. For returns, take inflation off the CAGR to get the real return. An FD paying 7% with 6% inflation earns about 1% in real terms before tax. To compare money across countries, use the currency converter as well, since price levels and exchange rates move separately.

Sources

What this calculator does not account for

  • Your own spending mix, which can rise faster or slower than the average.
  • Future inflation, which is an assumption, not a forecast.

How this is calculated

Formula: Ratio of price levels

value in later year =amount × CPI(later) ÷ CPI(earlier)

What the symbols mean

  • CPIConsumer price index, World Bank series FP.CPI.TOTL (2010 = 100).

Good to know

  • Forward mode: future cost = amount × (1 + inflation)^years.

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Worked examples

Each example is worked out by the same code as the calculator above.

₹1 lakh in 20 years at 6%

Today's value = ₹1,00,000 ÷ 1.06^20 = ₹31,180. Put the other way, a cost of ₹1 lakh today becomes ₹3.21 lakh.

Rule of 70

Divide 70 by the inflation rate for roughly how many years prices take to double. At 5%, that is 14 years; the exact figure is 14.2.

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Questions

Where does the data come from?

The World Bank's open data API, which compiles national statistics offices' consumer price indexes. It is refreshed daily on our side.

Why is this year missing?

Annual CPI is published after the year ends, so the newest year can take a while to appear.

What inflation rate should I use for planning?

Central banks target about 2% (US, UK, euro area) and 4% (India). Many planners use a little more to be safe.

What is India's inflation target?

4% CPI inflation, with a tolerance band of 2% to 6%, set for the Reserve Bank of India's monetary policy committee.

How do I adjust a past salary for inflation?

Multiply it by CPI in the later year divided by CPI in the earlier year. The past mode on this page does that with World Bank data.

What is a real return?

The return after inflation: (1 + return) ÷ (1 + inflation) − 1. At 10% returns and 6% inflation that is about 3.8%.