Inflation: why prices go up

Inflation is the general rise in prices over time. In India it has often been around 4–6% a year.

What it does to your money

If inflation is 6%, something that costs ₹100 today will cost about ₹106 next year. Cash kept under the mattress loses buying power every year.

Real return

If your savings account pays 3% and inflation is 6%, your real return is about −3%. You have more rupees, but they buy less.

Beating inflation

• Keep only what you need for the short term in a savings account.
• For long-term goals, consider options that historically grew faster than inflation, like diversified equity funds.
• Higher return usually means higher risk, so match the option to your goal and time.