Impact Of Inflation

Impact of Inflation Calculator

The Inflation calculator helps you to determine the impact of inflation on your purchasing power, providing an estimate of the value of money after a specific period.

Inflation refers to the general increase in the price level of goods and services in an economy over a period of time. It means that, on average, the prices of goods and services are rising, and the purchasing power of a currency is decreasing. In India, it is often measured as the Consumer Price Index (CPI) or the Wholesale Price Index (WPI), which track the changes in the prices of a basket of goods and services over time. The WPI measures prices received by producers of goods, while the CPI measures prices facing consumers at the retail level.

The calculator considers the following factors:

• Current monthly expense
• Inflation rate
• Future value of current monthly expense years later

Once you enter the details, the calculator will display the current amount and Future value of the current expense.

Disclaimer :

This tool has been designed for information purposes only. Actual results may vary depending on various factors involved in capital market. Investor should not consider above as a recommendation for any schemes of HDFC Mutual Fund. Past performance may or may not be sustained in future and is not a guarantee of any future returns.

• Decreased Purchasing Power: Inflation reduces the value of money over time, meaning your savings will buy less in the future than they do today.
• Erosion of Savings: If the inflation rate is higher than the interest rate on your savings, the real value of your savings decreases.
• Impact on Fixed Income: Individuals relying on fixed income sources, such as retirees, are particularly vulnerable to inflation as their income does not increase with rising prices.
• Investment Adjustments: To combat inflation, it's essential to invest in assets that typically outpace inflation, such as stocks or real estate.

• Consumer Price Index (CPI):
• CPI Calculation 
  
   
   
• Inflation Rate Calculation 
   

• A: Starting cost in the CPI for a specific good or service.
• B: Ending cost for the same good or service.
   

• Future Value Estimation: Helps estimate the future value of current expenses, aiding in better financial planning.
• Purchasing Power Insight: Provides insight into how inflation will impact your purchasing power over time.
• Investment Planning: Assists in planning investments to ensure they outpace inflation.
• Budget Adjustments: Helps adjust budgets to account for expected inflation rates.

• Formula: 

• A: Starting cost in the CPI.
• B: Ending cost in the CPI.

• Definition: An inflation calculator estimates the impact of inflation on your purchasing power over a specific period.
• Function: It considers factors like current monthly expenses, inflation rate, and future value of expenses to provide an estimate.

• Demand-Pull Inflation: Occurs when demand for goods and services exceeds supply.
• Cost-Push Inflation: Results from an increase in the cost of production, leading to higher prices.
• Built-In Inflation: Caused by adaptive expectations, where businesses increase prices to keep up with rising costs.

• Definition: Price inflation refers to the general increase in the price level of goods and services in an economy over time, reducing the purchasing power of money.