Inflation is an indicator that shows the rate of price change when compared to a particular category of goods over a certain time period. Inflation means the upgrading in the prices of goods or services that indicates a fall in purchasing capacity.
An inflation calculator computes the effect of inflation on buying power and capacity of a person. It primarily shows the worth of a quantity of money after a specific time period. The inflation calculator even helps to calculate the worth of the same sum of money if it is invested.
Two main measures of inflation-
- CPI - Consumer Price Index
- WPI - Wholesale Price Index
How Does Inflation Affect Your Savings?
Every investor makes his savings and investments with the aim of growing their money with a certain time periodin order to fulfil and fund their provisions and financial requirements in future.
Even if every investor plans to save effectively, certain factors like inflation may affect the savings. Inflation effects the prices of goods and services, eventually diminishing an individual's purchasing power.
Investors usually save their money in bank accounts so that they keep earning interest, but sometimes such interest may not be of use to figure out the inflation effects. Also, it is noticed that the impact of inflation principally depends on the type of investment one chooses to make. The returns on such investments may differ from time to time based on the altitude of the inflation.
How is Inflation Calculated?
Inflation is calculated by using CPI or Consumer Price Index. It measures the change in the price of goods and services by taking a average value of each.
CPI = (Price of Fixed Basket of Goods and Services in Current Year/ Price of Fixed Basket of Goods and Services in Base Year) x100
Inflation is calculated using the formula once the CPI for the two years is calculated.
Formula for Inflation
Inflation iscalculated by using CPI or Consumer Price Index
Inflation = ((CPI x+1 – CPIx)/ CPIx))x100
Advantages of Inflation Calculator
The following are the primary advantage of using an inflation calculator-
Free to use:Our inflation calculator is free to use and can be used multiple times.
Accurate Results:This inflation calculator is error free and shows accurate results without any delay.
Easy to use:The inflation calculator is easy to operate. A person just needs to enter the money amount to compute the purchasing power of the same in the upcoming years.
Saves your time: The inflation calculator in India needs only a few seconds to show the results. It saves your valuable time and is much more easy than manual calculations.