A savings target can grow in rupees and still fall short of what you want to buy. Inflation planning helps you distinguish the future rupee cost of a goal from the purchasing power of a projected investment balance. Start by writing down which of those two questions you want to answer.
Estimate the future cost of a goal
Suppose a goal costs ₹10 lakh today and you expect to pay for it in 10 years. At an illustrative 6% annual inflation rate, multiply ₹10 lakh by 1.06 to the power of 10. The estimated future cost is ₹17.91 lakh. At 4%, it would be about ₹14.80 lakh, and at 8%, about ₹21.59 lakh. These are scenarios. The actual cost of education, housing or healthcare can change at a different rate from a broad inflation index.
Express a future balance in today’s rupees
If you expect to have ₹10 lakh in 10 years, divide it by 1.06 to the power of 10 under the same inflation assumption. That balance would have purchasing power of roughly ₹5.58 lakh in today’s rupees. To compare a balance with a goal, put both amounts in the same year’s rupees. Comparing a future investment balance directly with today’s price can make the projected gap look smaller than it is.
Separate nominal and real returns
An illustrative 8% nominal return with 6% inflation gives a real return of approximately 1.89% before taxes and fees. Divide 1.08 by 1.06 and subtract 1. Subtracting inflation directly gives a useful rough approximation of 2%. The difference grows when the assumed rates are higher. Fees and taxes can further reduce the amount available for the goal, so record whether your projected return already accounts for them.
Compare the same scenarios across tools
Use the SIP calculator to model monthly contributions and the lump-sum calculator to model an upfront amount. Use the same horizon and document your inflation assumption for both. If a result is already expressed in today’s rupees, compare it with the current cost of the goal directly. Rerun the calculation with a higher cost assumption and check whether the result still meets the goal.
For background, see SEBI’s investor guide to inflation and its inflation calculator. Find related topics in the Investment hub. Examples are educational estimates. Last updated 4 November 2026.
