Understanding Inflation
Inflation is the rate at which overall prices for goods and services rise over time. As inflation increases, each unit of currency buys fewer goods and services. Understanding inflation helps you compare past and present prices, measure changes in purchasing power, and make better financial decisions.
The Formula Used
Future Value = Present Value × (1 + Rate/100)^Years
Why calculate inflation?
- Retirement Planning: Understand how much you'll need in the future.
- Investment Analysis: Check if your returns beat the inflation rate.
- Salary Negotiation: Ensure your pay raises match the rising cost of living.