Money Basics · Money 101

Inflation

A samosa today costs ₹10. In 1995 it was ₹2. In 2010 it was ₹5. By 2040 it'll probably be ₹20.

That's inflation. Prices in India rise a few percent every year. RBI is mandated to hold it near 4%, inside a 2–6% band. It's not a conspiracy, it's how economies grow.

What inflation does to your money

• ₹1 lakh in a savings account at 3% over 10 years → ₹1.34 lakh on paper. But at a 5% inflation assumption, that buys what about ₹82,000 buys today. You went backwards.
• ₹1 lakh invested at 12% (a normal equity return) over 10 years → ₹3.1 lakh. At the same 5% inflation, that is still about ₹1.9 lakh of today's spending power. You got richer.

> The first job of any money you save: beat inflation. Anything returning less is making you poorer slowly.

Benchmarks to remember (India, mid-2026)

2.5–3%Savings account

~6.5%Fixed deposits at large banks

7.1%PPF

10–13%Equity mutual funds (long term)

~4%Inflation. RBI targets 4%, tolerance band 2–6%

Takeaway. If your money is not growing faster than inflation, lately around 4% a year, it is shrinking in real terms.