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Finance
See what a present-day cost will grow to in future rupees at a given inflation rate, and watch the erosion of purchasing power unfold year by year.
A present-day cost compounds forward once per year at the inflation rate: future cost = present cost × (1 + inflation rate)^years. This is the same compounding shape as an investment growing at a fixed annual return, except here it describes prices rising rather than money growing — the practical effect is that the same amount of money buys progressively less as time passes. Assumptions: the inflation rate is held constant for the whole period, though real-world inflation varies year to year; and the model computes annual compounding only (it doesn't need a monthly-versus-annual distinction the way an investment SIP does, since there's no periodic contribution here — it's a single value projected forward).
Because a rupee today buys more than a rupee will buy in the future. If you plan for a goal using today's cost without adjusting for inflation, you'll systematically under-save — every goal-planning calculator on this platform uses this same inflation projection as its first step.
No. It's an assumption, and actual inflation varies year to year and by category — education and healthcare have historically run hotter than headline CPI in India, for example. Pick a rate that reflects the category of cost you're modeling, not a single universal number.
The projected value of the same present-day cost at the start of each year from today through your chosen horizon, so you can see the erosion curve — it accelerates in later years because each year's inflation compounds on an already-inflated base.