India's average inflation (CPI - Consumer Price Index) has been around 5-7% over the past decade. For planning purposes, use 6% as a conservative estimate. Education inflation is higher at 10-12%. Healthcare inflation: 8-10%. Food inflation: 5-7%.
How does inflation affect my investments?▼
If your investment returns 7% and inflation is 6%, your real return is only about 1%. Formula: Real Return ≈ Nominal Return − Inflation. To beat inflation and build real wealth, you need returns above 8-9%. Equity SIPs returning 12% give a real return of ~5.7% — genuinely growing your purchasing power.
How much SIP do I need to beat inflation?▼
Any investment returning more than inflation rate builds real wealth. Currently: FD at 7% barely beats 6% inflation. SIP at 12% gives 5.7% real returns. Over 20 years, ₹1L at 6% inflation becomes ₹3.2L — you need investments that grow faster than this to maintain lifestyle.