What a return bought, after inflation
Grows to, in rupees
Worth, in start-year rupees
Real return a year
The shortcut (return − inflation)
How far off the shortcut is
Needed at the end to buy what the amount bought at the start

The starting figures are the inflation post's one-year SBI deposit, rolled over, and CPI inflation over the same years, at exact rates so the result matches the post to the rupee. Before tax: tax lowers the real return further (what pre-tax hides). CPI is a national average basket; your own costs may rise faster or slower.

Prefilled with: a one-year SBI fixed deposit rolled over, and CPI inflation, March 2013 to March 2026 (the inflation post's example).

What it does

A return in rupees isn’t the same as a return in what those rupees buy. Enter an amount, the number of years, a return a year and an inflation rate. The calculator shows what the amount grows to, what that is worth in start-year rupees, the real return a year, and how much you’d need at the end to buy what the amount bought at the start.

It also shows the common shortcut, return minus inflation, beside the exact figure. The two are close when the numbers are small and drift apart when they aren’t, which is the point the inflation post makes with one of its years.

It starts from that post’s example: a one-year SBI fixed deposit rolled over each year, against CPI (consumer price index) inflation over the same years. The rates carry several decimals because they’re the exact ones; rounded, the answer no longer matches the post to the rupee. Reset to the post’s example puts them back.

The formula

Real return  =  (1 + return) / (1 + inflation)  −  1
             ≈  return − inflation        (only for small numbers)

Worth in start-year rupees  =  Amount × ((1 + return) / (1 + inflation))^N

What it leaves out

It is before tax; tax lowers the real return further. CPI is a national average basket, and your own costs may rise faster or slower. A constant rate each year is a summary: real returns jump around from year to year, as the post’s year-by-year table shows.

How it works

The method, step by step, with the worked example this tool reproduces: Inflation and real returns: what your money actually bought.

This is a teaching tool. It shows how a calculation works on the numbers you give it; it doesn't tell you what to buy, sell or hold, makes no forecast, and doesn't value any real listed company. See the disclaimer.

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