Inflation is a measure of how much prices for a specific set of goods increase over a certain period. It reflects the decrease in purchasing power, meaning your money doesn't go as far as it used to.

Inflation refers to the rise in prices for goods and services that are essential for daily life. It indicates the reduction in the purchasing power of the rupee over time.

There are two main ways to measure inflation:

• Consumer Price Index (CPI)
• Wholesale Price Index (WPI)

The WPI tracks price changes at the wholesale level, while the CPI tracks price changes at the retail level.

Every investor saves and invests with the goal of growing their wealth over time to meet future needs. However, inflation can significantly impact savings and investments.

Inflation influences the prices of goods and services, eroding the purchasing power of money. While many people store their savings in bank accounts to earn interest, this interest may not always keep up with inflation, reducing the real value of the savings.

The impact of inflation on savings depends largely on the type of investment. Returns on different investments can vary, with some potentially outperforming inflation, while others might fall short.

Inflation is an unavoidable aspect of the economy. While the government attempts to manage it through fiscal policies, there are some factors that remain beyond its control. Therefore, individuals must take proactive steps to manage inflation’s effects on their finances.

Investing wisely in stocks, mutual funds, and other assets can help combat inflation. Over time, these investments have historically offered returns that outpace inflation. However, it’s important to remember that these investments come with risks that could lead to losses.

By diversifying your investment portfolio and choosing options that offer strong long-term returns, you can reduce the impact of inflation on your savings and wealth.

An inflation calculator helps determine how inflation will affect the value of money over time. It shows the value of a specific amount of money after a certain number of years, accounting for inflation. It can also estimate the future value of money if it is invested.

Inflation is calculated using the Consumer Price Index (CPI), which tracks the change in the price of goods and services over time. CPI is calculated by taking a weighted average of the prices of these goods and services.

CPI = (Cost of Fixed Basket of Goods and Services in Current Year / Cost of Fixed Basket of Goods and Services in Base Year) * 100

Inflation is determined after calculating the CPI for two different years using this formula.

Inflation can be measured by using the Consumer Price Index (CPI):

Inflation = ((CPIx+1 – CPIx) / CPIx) * 100

Note: CPIx represents the initial Consumer Price Index.

Here are the key benefits of using an inflation calculator:

• Free to Use

Sensex India's inflation calculator is free to use, allowing you to make multiple calculations without any cost.

• Precise Results

This inflation calculator provides accurate estimates of the future value of your money, based on historical inflation rates and the potential returns from investments.

• Simple to Use

The inflation calculator is easy to operate. Simply input the amount of money you want to assess, and the calculator will show the purchasing power of that money in the future.

• Time-Saving

The inflation calculator produces results quickly, saving you time compared to manual calculations.