Purchasing Power Calculator
Key takeaways
- ₹10.00 L held as-is for 10 years at 6% inflation buys what ₹5.58 L buys today — 44.16% of its purchasing power gone.
- At 6% a year, more than half the buying power is gone by year 12.
- Ten more years — 20 in all — would leave ₹3.12 L of today’s buying power.
Year-by-year erosion
The first two columns always add to the ₹10.00 L entered above — the amount never changes, only what it buys. "Lost that year" is that year’s own share of the erosion.
| Year | Real value | Lost to date | Lost that year |
|---|---|---|---|
| 1 | ₹9.43 L | ₹56,604 | ₹56,604 |
| 2 | ₹8.90 L | ₹1.10 L | ₹53,400 |
| 3 | ₹8.40 L | ₹1.60 L | ₹50,377 |
| 4 | ₹7.92 L | ₹2.08 L | ₹47,526 |
| 5 | ₹7.47 L | ₹2.53 L | ₹44,835 |
| 6 | ₹7.05 L | ₹2.95 L | ₹42,298 |
About the Purchasing Power Calculator
The Purchasing Power Calculator shows what a fixed rupee amount is actually worth, in today's terms, after a number of years of inflation. The number on the note never changes; what changes is how much it buys, and this page states that erosion as both a rupee figure and a percentage.
Enter the amount, the annual inflation rate over the period, and the number of years. The calculator divides the amount by the compound inflation factor (1 + inflation ÷ 100) raised to the number of years, which is the mirror image of what the Inflation Calculator on this site does: that one starts from what something costs today and projects what it will cost later, multiplying forward. This one starts from a fixed amount and divides back to today's terms — the difference between "what will this expense cost me in ten years" and "what is this ten-year-old salary really worth now".
"Equivalent value today" is what the amount is worth once inflation is accounted for. "Purchasing power lost" states the same erosion as a percentage, and it always sits between 0% (no inflation, or no time) and, in the limit, 100%. The chart splits each year into what the money still buys and what has been lost to date; because those two always add to the same constant amount, every bar is the same height and the split visibly rotates, which is the picture that a growing-bar chart would get wrong.
This applies one constant inflation rate for the whole period. Real inflation varies year to year and by category — healthcare and education have historically run well above headline CPI, while electronics have run below or negative — so the general rate you enter is an assumption about an average, and the output is an illustration of that assumption.
Frequently asked questions
How is purchasing power calculated?
Equivalent value today = Amount ÷ (1 + inflation ÷ 100) ^ years. The denominator is the same compound-growth factor used to project a future cost; here it divides rather than multiplies. Purchasing power lost % = (1 − 1 ÷ factor) × 100.
How is this different from the Inflation Calculator?
The direction. The Inflation Calculator takes something's cost today and projects what it will cost at a future date, multiplying forward. This page takes a fixed amount and works out what it is worth in today's terms once inflation has eroded it, dividing back. Both use the same (1 + g)^n factor, so the two are inverse questions about one number.
Why does the money in my savings account lose value?
Because the rupee figure stays fixed while prices around it rise. If prices rise 6% in a year, the same ₹1,00,000 buys roughly 5.7% less than it did — the shortfall is not symmetric with the inflation rate, because it is 1 − 1/1.06 rather than 6%. Interest earned on the balance offsets part of that; this page models the erosion alone, not any return.
What inflation rate should I use?
India's headline CPI inflation has generally run in the mid single digits over the last decade, but the rate that matters to you depends on what you actually spend on. Running the calculation at a low rate and a high one shows the range that a single figure hides, which is more useful than any one number this page could suggest.
Can purchasing power lost ever exceed 100%?
No. The formula is 1 − 1 ÷ factor, and the factor is always at least 1 for a non-negative inflation rate, so the loss approaches 100% as the years or the rate grow but never reaches or passes it. Money loses value asymptotically; it does not go negative.
Does this account for interest, returns or tax?
No. It models the erosion of a fixed amount only. To see the two forces together, project the amount forward with the Lumpsum or FD calculator at whatever return it actually earns, then put that result through this page at the same number of years — the difference between the two is the real, inflation-adjusted gain.
Disclaimer: This calculator is for information and education only. It is not investment advice and not a recommendation. Where a rate or a price is an input, it is an assumption, and actual rates vary. It does not take your personal circumstances into account. Every figure is computed solely by applying the formula and assumptions stated on this page to the inputs you entered.