How inflation is stealing your wealth

Did you know the things you could buy for Rs 100 in 2012 costs Rs 168 in 2022? If you look at the table below, we end up paying more for the same stuff each passing year without giving much thought to it. This general increase in price is called inflation. It increases the cost of living and lowers your spending power. From milk to petrol to groceries to education and healthcare costs and just about everything we use in our daily lives, the prices keep rising year-on-year and we end up paying more without giving much thought to it. Inflation, just like interest, adds on top of last year's numbers - this means that the effect is just like that of compound interest but in a negative manner. How inflation hurts you India's inflation rate has compounded by 5.3 per cent over the last 10 years. If you think it's a small number and try to neglect it, it can hurt your wealth. Here is an example. Let's say you had kept aside Rs 5 lakh in your savings account at the beginning of 2012 and earned an average interest of 5 per cent in these 10 years. Now, mathemati

This article was originally published on July 12, 2022, and last updated on November 14, 2022.