Inflation eats your savings

Inflation is just the speed at which everyday prices rise. A snack that cost ₹10 last year might cost ₹11 this year. Nothing dramatic in one year, but it adds up.

The rupee example. Say you keep ₹1,00,000 in a drawer. At 5% inflation, one year later it still shows ₹1,00,000, but it only buys what about ₹95,000 bought last year. You lost roughly ₹5,000 in buying power without spending a rupee.

This is why keeping everything in cash is not fully safe. Money you do not need soon should sit somewhere it can grow, so it at least keeps pace with prices. The Reserve Bank of India tries to keep inflation inside a 2% to 6% band, but even inside that band, idle cash loses value every single year.

This is general education, not financial advice.