Inflation has become an important aspect in today's economic world, which not only affects our current spending capacity but also gives new challenges to our financial plans for the future. Due to inflation, the prices of every commodity and service are gradually increasing. For example, in the 1970s, the price of a cinema ticket was less than ₹ 1, which is now above ₹ 200 in metro cities.

In such a situation, the question arises why inflation occurs. How much will inflation affect the funds you have saved in the future? Let us try to know the answers to these questions one by one. First, let us know how inflation occurs.

Cost-push inflation: When the prices of materials used in the manufacture of a product increase, companies pass it on to consumers, making things expensive.

Demand-pull inflation: When the demand for a product or service exceeds its supply, prices automatically start rising.

Printing more money: When governments print more currency, the supply of money in the market increases, but if the number of goods and services does not increase to the same extent, things become expensive.

The Reserve Bank of India (RBI) aims to keep inflation around 4%. Although inflation has been under control for some time, it is important to keep this in mind while making long-term financial plans, as inflation reduces the purchasing power of money over time.

How much time will it take to accumulate 1 crore?
If we assume that you invest ₹10,000 every month through SIP and get 12% annual interest on it, then a fund of ₹1 crore can be ready in 20 years. But due to inflation, the purchasing power of this ₹1 crore will decrease after 20 years.

Assuming an inflation rate of 6%:
The value of ₹1 crore after 20 years will be equal to ₹31.18 lakh today.

After 30 years, it will reduce to around ₹17.41 lakh.

After 50 years, it will reduce further to only around ₹5.43 lakh.

This shows that the real value of money decreases in the long run due to inflation. Hence, while it is important to accumulate a corpus of ₹1 crore, it is also important to keep inflation in mind to achieve long-term goals. While doing financial planning, it may be necessary to choose high-return investment options and re-evaluate your financial goals from time to time to minimize the impact of inflation.