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Purchasing Power & Cost of Living

Inflation & Real Return Calculator

Calculate the future inflated cost of living, purchasing power erosion on cash savings, and exact Fisher real returns in India.

Base financial value
₹
One Lakh
Annual cost of living increase
%
Future time period
Yr
Fifteen Years
Future Cost in 15 Years (@ 6% Inflation)₹2,39,656Prices rise by 139.7% (+₹1,39,656)
Calculate Real Return (Fisher Equation):
If Nominal Portfolio Return is
%
Exact Real Return (Purchasing Power Growth)5.66% p.a.

What Is Inflation?

Inflation is the persistent increase in the general price level of goods and services over time. As prices rise, each unit of currency buys fewer goods, leading to a steady loss of purchasing power.

For Indian families, inflation acts as an invisible tax on cash savings. Leaving money in a standard savings account (yielding 2.5%–3.5%) while inflation runs at 6% results in a real wealth destruction of ~3% every year.

How Is Inflation & Future Cost Calculated?

Future Cost = Present Cost × ( 1 + i )n
Fisher Real Return = ( 1 + Nominal Return ) / ( 1 + Inflation ) - 1
i = Annual inflation rate (e.g. 0.06 for 6%)
n = Number of years into future

Frequently Asked Questions

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