Fill in the empty fields to see the result.
Value at the end = amount × CPI(end) / CPI(start). Use the official consumer price index of your country.
Fill in the empty fields to see the result.
Real return = (1 + return after tax) / (1 + inflation) − 1.
What inflation does to the value of money
Inflation is the general rise in prices over time. When prices rise, each rupee buys less. This loss of buying power is called loss of purchasing power.
Savings kept as cash lose value at the full inflation rate. The amount in rupees stays the same, but it pays for fewer goods and services.
In Pakistan, inflation is usually measured with the Consumer Price Index (CPI). The Pakistan Bureau of Statistics publishes it. CPI tracks the price of a fixed basket of goods and services such as food, rent, fuel, transport and education. The percentage change in that index is the inflation rate you see in the news.
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Using the inflation calculator
The inflation calculator above uses official CPI index points. You choose a start month and an end month. It then shows:
- Cumulative inflation: how much the price level rose between the start month and the end month.
- Value of money: what an amount from the start month is worth in end-month rupees, and the reverse.
Use index points rather than adding up monthly or yearly inflation rates. Inflation compounds: each month's rise is applied to prices that have already gone up. Adding the rates together understates the true change. The calculator works from the index levels, so it avoids this error.
Your own cost of living can differ from CPI. If most of your spending goes on rent, school fees or fuel, your personal inflation may be higher or lower than the official figure.
Nominal return and real return
- Nominal return is the profit rate the bank or scheme quotes, before inflation.
- Real return is what remains after inflation, and after tax if you include it. It shows whether your purchasing power actually grew.
A quick estimate is nominal rate minus inflation rate. This shortcut becomes less accurate when rates are high, as they often have been in Pakistan. The exact method divides what your money grew to by what prices grew to over the same period. The real-return calculator does this for you.
If the result is negative, your savings are losing purchasing power, even though the rupee balance is rising.
Why tax matters
Profit on bank deposits and many savings products is usually subject to withholding tax. That tax is taken from your nominal profit before you receive it. Inflation then applies to the whole balance. Tax rates can depend on your filer status and can change with each budget, so check the current rate with your bank or the FBR. For background, see Payments, tax, Islamic banking.
The correct order is:
- Start with the nominal profit rate.
- Subtract tax on the profit to get the after-tax rate.
- Adjust the after-tax rate for inflation over the same period to get the real return.
How to compare deposit rates with inflation
Comparing a deposit rate with inflation only works when both cover the same period and are measured the same way.
| Check | What to look for |
|---|---|
| Same period | Compare an annual rate with annual inflation, not with a single month's change. |
| Forward or past | Inflation figures look backward. A deposit rate applies to the months ahead, when inflation may differ. |
| Effective rate | Profit paid monthly and reinvested earns more than the headline rate suggests. See APR and Effective Rate. |
| After tax | Compare the after-tax rate, not the quoted rate. |
| Lock-in | Term deposits can carry penalties for early withdrawal. |
| Islamic products | Profit on Islamic deposits is often an expected rate, not a fixed one. See Islamic finance. |
For how banks calculate deposit profit, read Deposit Interest. For government schemes, see National Savings schemes.
The policy rate and inflation
The State Bank of Pakistan (SBP) sets the policy rate. It uses the rate mainly to manage inflation. Bank deposit and lending rates tend to follow it over time. The latest decision on record here: SBP policy rate raised by 50 bps to 12% with effect from 27.10.2026 (MPC). Check the SBP website for any change after that date.
When the policy rate is above inflation, deposit rates have room to give a positive real return. When it is below, real returns on deposits are usually negative. More on this in SBP rates and economy.
"How to beat inflation": what it really means
There is no guaranteed way to beat inflation. Every option involves a trade-off between return, risk, access to your money and cost.
- Bank deposits and National Savings: lower risk, but the real return can be positive or negative depending on rates, tax and inflation.
- Stocks and funds: can rise faster than prices over long periods, but can also fall sharply. See What Stocks Are and Mutual Funds.
- Gold: often discussed as a store of value. Its price in rupees moves with world prices and the exchange rate, and it can fall. See Gold in Pakistan.
- Property: can be costly to buy and sell, and hard to turn into cash quickly. See Real Estate and REITs.
Leveraged forex and CFD trading is not a hedge against inflation. It can lose money fast, including more than you expected, and is a different activity from saving. Read Law and regulators for the legal position in Pakistan.
Before taking on investment risk, many people keep an emergency reserve in an accessible account. See Emergency Fund, Diversification and Risk Tolerance.
Frequent questions
What is inflation in Pakistan measured by?
Mainly by the Consumer Price Index published by the Pakistan Bureau of Statistics. The inflation calculator on this page uses official CPI index points.
Why can my savings lose value if the balance grows?
If prices rise faster than your after-tax profit, each rupee buys less. Your real return is then negative, even though the number in your account is higher.
Can I just subtract inflation from my deposit rate?
It gives a rough estimate only. When rates are high the error grows. Use the real-return calculator for an exact figure.
Should I include tax when comparing deposit rates with inflation?
Yes. Tax is taken from your profit, so the after-tax rate is the one to compare with inflation.
Does a higher policy rate mean higher deposit profit?
Deposit rates usually follow the policy rate over time, but each bank sets its own rates. Check current rates directly with your bank.
Where can I learn more about saving basics?
Start with Saving, Investing, Loans and Compound Interest.