Inflation Cost Calculator
Inflation Cost Calculator
Do you know why the current price of a particular product or service is higher than its price few years ago? Well, it is because of inflation. Due to inflation, products and services become costlier over the time.
Before creating your investment portfolio, you must know the impact of inflation on few commonly used products and services to calculate your future sum requirement.
Since, inflation can affect your returns on investment. An Inflation Cost Calculator can help you to calculate future predicted value of particular goods or service.
How does the Inflation Cost Calculator work?
In order to use the Inflation Cost Calculator, one should know the following terms:
It is cost of buying a product or service as of today.
Rate of Inflation is the rate of increase in the current prices of products and services on an annual basis.
Time period is the number of years from current date.
Inflated Cost is the cost of a particular product or service in future.
Formulas:
A = P*(1+r)^n
Example:
Assume you buy 10 kg apples today at Rs 2000. If Inflation rate is 5%. The cost of apple in 10 years would be?
Inflated Cost = 2000*(1+5%)^10 = Rs. 3257.79
Why should you use a Inflation Cost Calculator online?
Using the Inflation Cost Calculator online helps you in making a financial decision on whether to make an investment in a certain asset or not? on a real-time basis on the basis of inflation rate. Thus, helping you choose investments that beat inflation.
Advantages of using a Inflation Cost Calculator:
Listed below are few advantages of using a Inflation Cost Calculator:
The Inflation Cost Calculator helps you in calculating the inflated cost of a product or service irrespective of the currency denomination, that is, you can use it for calculation in INR, USD, JPY, EUR or any currency of your choice.
An Inflation Cost Calculator helps you in making decisions quickly that is because you can compare the various investments based on inflation rate on a real time basis.
The Inflation Cost Calculator does all the mathematics functions online with few inputs on your end. No coding or doing the maths is needed, this makes it easy to operate.
You can get the inflated cost of commonly used goods or services, which helps in making a financial plan to achieve the financial goals.
Understanding Inflation -
Inflation refers to the continuous rise in the prices of services and goods. It measures the rate of increase in the current rates of some products and services. The purchasing power of a currency starts declining due to inflation. Thus, inflation results in the reduction of the value of your money. Central bank and Government try to make the prices stable and keep inflation low, however, with increased demand for growing population and limited raw materials. It’s hard to beat the inflation.
Inflation is defined as a percentage. Wholesale Price Index (WPI) and Consumer Price Index (CPI) are two concepts relevant to inflation. WPI indicates the variations to the wholesale level price level, whereas CPI is about the effect on the retail level price level. CPI is a highly popular indicator to identify deflation and inflation in the economy. In 2013, CPI replaced WPI in the Indian economy. The difference in the percentage in CPI throughout a period refers to inflation for consumer goods. However, it reveals retail inflation only.
You can use a inflation calculator to make your calculation easy.