In this article, you will get an inflation impact calculator, that will help you estimate the impact of inflation over your money. This tool is going to be of utmost importance to you in managing your resources.

What is Inflation

Inflation is the general rise in the price of goods and services over a period of time. It is generally due to the following reasons;

1. Demand supply mismatch: when more money chases less goods, the goods see a rise in price and inflation occurs.
2. Cost push inflation: When the input cost of goods or services increases, the consumers end up paying more prices than usual, leading to inflation.
3. Supply chain problems; When the supply of goods and services decreases due to pandemics, natural disasters etc, demand supply mismatch occurs, thus leading to inflation.

Impact of Inflation

When inflation occurs, people have to spend more money to meet their daily demands. This erodes their savings.

Further more, the value of money falls, and thus the purchasing power of people as well as that of money decreases. With the result, people end up paying more than usual and it impacts their investment plans, businesses etc.

What is Our Inflation Impact Calculator

The inflation impact calculator provided above helps you check how your money devalues due to inflation.

Suppose you buy a basket of goods today, and with the passage of time, due to inflation the price of the basket will increase. The calculator will help you estimate how much money you will have to spend in future to buy the same basket of goods.

Formula Used

The above calculator used the following formula;

\[ FP = PP \times (1 + r)^t \]

Where

1. FP = Amount of money in future equivalent to present value or simply the future price of goods.
2. PP = the present price of any good or service.
3. r = rate of annual inflation. kindly note that in the above calculator, you have to use the annual rate of inflation.
4. t = time period, and it is taken in years.

Example;

If present cost of anything = 1000 INR, and I want to calculate how much money will I have to spend for the buying the same thing in future (or equivalent money of 1000 INR after 10 years), then the above formula will help.

Assuming that the average rate of inflation for these 10 years is 5%, then in future I will have to spend the amount of money given by;

\[ FP = 1000 \times (1 + 5)^{10} \]

Solving the above equation, we get \(FP\) = 1629 units.

It means after 10 years, I will have to spend 1629 units of money for buying a basket of goods that we could buy today for just 1000 units.

How To Use The Above Calculator

The calculator has the following inputs:

1. Present Value; Enter the present value of money, good or service.
2. Annual Inflation Rate: Enter the average rate of inflation. You will get this rate from the reports published by government and various private agencies.
3. Number of years: In this field, you have to enter the number of years, after which you want to check the impact of inflation on your money.

After putting all the values in the fields, Click on the calculate button, and you will get the amount of money that will be equivalent of the input money after the entered number of years.

Is Our Calculator Reliable

Our calculator uses the standard mathematical formula for calculating the impact of inflation. This formula is widely used across various fields like mathematics and economics to calculate the future equivalent of current money.

Additionally, we have also cross checked our calculator with all the available such calculators, and it has withstood all the tests.

So, we are sure to say that this calculator is very reliable and you can use it to plan your future safely.

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So, this was all about the inflation impact calculator. We are sure that you have found this tool useful.