Inflation is a rise in the general prices of goods and services over time. Inflation impacts the buying power of money and
the return rate for an investment. The effect of inflation simulator simulates the trend of the entities affected by inflation.
The effect of inflation can be seen in form of the exponential cost and buying power curves in the chart. The following fine-tuned simulators represent the trend of the entities affected by inflation.
Cost is the monetary value required to acquire a thing. Buying power is the value of money as it relates to the quantity and quality of goods or services it can afford.
This simulator represents the effect of inflation on the cost of a product and the buying power of a amount.
Click here to try out the simulator.
Example 1: Andrew's monthly expenses sum up to 1,500.00 GBP. He has to figure out similar expenses on his retirement after 20 years. He is assuming the average inflation rate over the period to be 3.50 %.
| Present Amount | Period | Inflation Rate | | 1,500.00 GBP | 20 Year | 3.50 % |
Click here  to see Andrew's likely monthly expenses on his retirement.
The cost in future indicates the monthly expenses to maintain the present lifestyle on his retirement. The buying power in future is the money value in terms of today's amount.
Example 2: Aarti would be receiving 18,00,000.00 INR after 15 years on the maturity of her endowment insurance policy. She is eager to know the cost (in terms of today's money) the amount would be worth. She is expecting the average inflation to be 5.00 % over the period.
| Future Amount | Period | Inflation Rate | | 18,00,000.00 INR | 15 Year | 5.00 % |
Click here to see Aarti's findings.
This simulator represents the real rate of return on your investments. The inflation effect is proportional to the inflation rate.
Click here to try out the simulator.
Example: Eve needs to figure out the actual rate at which her investments are growing considering the impact of 3.00 % inflation. The interest rate on her investments is 10.00 %.
| Interest Rate | Inflation Rate | | 10.00 % | 3.00 % |
Click here to see Eve's real rate of return.
|