Inflation Lab
Watch what a fixed amount of money is actually worth,year after year.
Prices rise every year, so a fixed amount of money buys a little less each year it just sits still; this shows how much less, in today's rupees.
This is why "safe" cash sitting idle is still losing value every year.
This Lab shows what a fixed amount of money is worth in today's purchasing power after years of rising prices. You choose the amount, the number of years and a yearly inflation rate, and the chart shows the real value falling year by year. It only ever goes down, which is the point: money that sits still buys a little less each year.
How to use this Lab
- Set the amount today, from ₹10,000 to ₹1,00,00,000.
- Set the years from now, from 1 to 40.
- Set the inflation rate, from 3 to 10 percent. This is an assumption you choose, not a forecast.
- Read the two cards under the chart: what the money is worth today, and what it is really worth at the end, with the percentage it has lost.
What to notice
- The rupee count stays the same
- The amount in your account does not change. What changes is what it can buy. The Lab shows the second number, the real worth, because that is the one that matters when you spend.
- Small rates add up over long periods
- Move the years from 5 to 30 at a fixed rate, and watch the loss grow faster than the years do. A rate that feels small in one year becomes large over twenty.
- The rate you assume matters a great deal
- Change the inflation rate by a few points and compare the end value. Nobody knows the future rate, so it is useful to try a low one and a high one.
Three runs of the Lab (hypothetical)
At 6 percent inflation, ₹50,000 left untouched for 20 years is really worth about ₹15,590 in today's rupees, which is 69 percent less.
At 4 percent, the same ₹50,000 over 20 years is really worth about ₹22,819, or 54 percent less.
At 8 percent, it is really worth about ₹10,727, or 79 percent less. The amount in the account did not change in any of the three. Only the price level did.
What this Lab does not show
- The Lab uses one steady inflation rate for every year. Real inflation moves up and down from year to year, and it differs from one household to another depending on what you buy.
- It shows only the loss of buying power. It does not show interest or growth. Money in a savings account or an investment may earn something that offsets part of the loss, which the Compounding Lab shows from the other side.
- It does not recommend any rate, product or amount. Maetis does not give investment advice.
Common questions
- What does the Inflation Lab show?
- What a fixed amount of money would really be worth, in today's rupees, after a number of years of rising prices at a rate you choose.
- What inflation rate should I use?
- There is no right answer and the Lab suggests none. Try several, including a low one and a high one, and see how much the result depends on it.
- Does inflation mean my money disappears?
- No. The rupee amount stays the same. It buys fewer things as prices rise, which is the loss the Lab shows.
- Is cash in a locker or a savings account safe from inflation?
- It is safe from being lost, but not from losing buying power. Whether interest offsets that depends on the rate it earns against the rate of inflation.