| Component | Amount (₹) |
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Got a salary hike but still feel the pinch? A Salary vs Inflation Calculator reveals if rising expenses are outpacing your earnings.
Salaries often seem to rise more slowly than the rate of inflation or the cost of living. With prices of essential goods and services steadily climbing, many people feel the pinch despite receiving periodic pay raises.
This is where a Salary vs Inflation Calculator becomes an indispensable tool.
Table of Contents
What Is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises over time. When inflation occurs, each unit of currency (like ₹1) buys less than before, meaning the purchasing power of money decreases.
Inflation In India ( Last 10 Years )
| Year | Inflation Rate (Approx) |
|---|---|
| 2024 | ~4.95% (Dec 2024) |
| 2023 | ~5.65% |
| 2022 | ~6.70% |
| 2021 | ~5.13% |
| 2020 | ~6.62% |
| 2019 | ~3.73% |
| 2018 | ~3.94% |
| 2017 | ~3.33% |
| 2016 | ~4.95% |
| 2015 | ~4.91% |
| 2014 | ~6.67% |
Our Calculator assumes an inflation rate of 4% for the calculation.
What Is A Salary Vs Inflation Calculator?
A Salary vs Inflation Calculator is an online tool designed to compare your salary growth with the inflation rate. It shows the real value of your income after accounting for the rise in prices of goods and services.
While a salary increment may seem like a raise on paper, it might not translate to increased buying power if inflation is high.
For example, a 10% salary increase might feel significant, but if inflation is 12%, your effective purchasing power has actually decreased.
How Does A Salary Vs Inflation Calculator Work?
The calculator basically calculates the real salary after accounting for inflation. The formula for the real salary is as follows.
Real Salary = Nominal Salary / (1+Inflation Rate)^n ( n is projected year)
Future Nominal Salary = Current Salary×(1+Salary Increment)^nFor example, if the nominal salary is Rs 50000 and the inflation rate is 6%, then the real salary after 3 years would be as follows, considering you get 8% salary hike
Future Nominal Salary : 50,000×(1+0.08)^3 = 50,000×1.2597 ≈ ₹62,985
Future Real Salary : 62985/ (1+.06)^3 = 62985/1.191 ≈ ₹52850
As you can see that even though you got 8% salary hike and your current salary is ₹62,985, your real purchasing power is only ₹52850.
Here is a table that shows the real salary of a person earning 1 lakh per month, with an expected salary hike of 10%, and inflation of 4%.
| Year | Nominal Salary (₹) | Real Salary after 4% Inflation (₹) |
|---|---|---|
| 1 | 1,10,000 | 1,05,769 |
| 2 | 1,21,000 | 1,11,872 |
| 3 | 1,33,100 | 1,18,322 |
| 4 | 1,46,410 | 1,25,182 |
| 5 | 1,61,051 | 1,32,421 |
How To Use The Salary Vs Inflation Calculator
To use the salary vs inflation calculator, you need to enter the following inputs.
- Current salary
- Current monthly expense
- Expected salary hike
Based on these inputs, the calculator will show you the following results.
- Required salary next year
- Required salary hike to beat inflation
- Financial status after 5 years
Benefits Of Salary Vs Inflation Calculator
- Track true income growth
- Plan financial goals
- Negotiate salary better
- Evaluate career decisions
- Monitor inflation impact
Conclusion: Salary Vs Inflation Calculator
A Salary vs Inflation Calculator is more than a number-crunching tool—it’s a financial health check. It helps you understand how inflation impacts your lifestyle, plan savings, negotiate better salaries, and make informed career choices.
Whether you are a professional, a freelancer, or someone planning long-term financial goals, understanding the real value of your salary is essential.
Start using a salary vs inflation calculator today and ensure your earnings keep pace with the rising cost of living.
