Basket of Goods Price Estimator
See how the cost of typical household items will grow over 10 years at a 6.0% inflation rate:
Worked Example: Purchasing Power over Time
Suppose you want to buy a basket of goods costing ,000 today, in 15 years, assuming a steady inflation rate of 3.5% p.a.:
- Future Cost = ,000 × (1.035)^15
- Future Cost value = ,753
- Cumulative Inflation = 67.5% increase
Due to inflation, you will need ,753 in 15 years to purchase what costs ,000 today.
Inflation Calculation Formulas
Depending on the selected mode, inflation operations are derived as follows:
1. **Future Cost (Escalation)**: How much an item costing principal **P** today will cost in the future:
2. **Purchasing Power (Depletion)**: How much raw cash **P** will buy in future equivalent terms:
Where:
- P = Principal cash or item cost today
- R = Expected annual inflation rate
- n = Number of years
Yearly Purchasing Power Loss Projection
| Year | Opening Value | Buying Power Loss | Closing Value |
|---|
Frequently Asked Questions
The Consumer Price Index (CPI) is a primary economic metric that measures the weighted average change in prices of a typical basket of consumer goods and services (like food, medical care, transportation, and energy). It is the standard gauge used to determine national inflation levels.
To preserve buying power, capital must be invested in growth assets that historically deliver returns higher than the rate of inflation. Such assets include equity mutual funds, direct stocks, real estate, gold, and inflation-indexed bonds, rather than standard cash savings or low-yield accounts.