India’s Inflation Reality: Why Your Retirement Plan Might Be a Mirage
What Government Data Says vs What Your Wallet Feels
If you go by the official numbers, inflation in India is at its lowest in years. As of July 2025, government data shows retail inflation at 1.55%—the cheapest cost-of-living increase since 2017. Food prices are even lower, with inflation at −1.76%. Health inflation, officially, is just 4.57%.
Sounds like a dream, right? Low prices, stable economy, more money left in your pocket.
But here’s the thing: step outside the spreadsheets and into a chemist shop, a hospital, or your local grocery store, and the story changes fast.
The Reality on the Ground
Ask any middle-class family, and they will tell you—monthly expenses are not just creeping up, they are sprinting. For many households, inflation feels closer to 5% or more. And when it comes to medical costs, the gap between government data and reality is even bigger.
In the real world, medical inflation feels like 14–15%—and that’s been the case for years. Every year, hospital bills, tests, and medicines quietly climb at a rate that can easily outpace your salary hikes or investment returns.
Take heart surgeries as an example. Today, in India, the cost can range from ₹1.5 lakh to ₹25 lakh, depending on the complexity, hospital, and aftercare. That’s not a typo—₹25 lakh. And if medical inflation continues at 14–15%, that same surgery could cost ₹60 lakh or more in 20 years. That’s before factoring in medicines, check-ups, and complications.
Why This Gap Matters for Retirement
When the official inflation number is low, it is easy to think you can “manage” with modest savings and interest income. But healthcare does not care about CPI reports—it follows its own curve.
The danger is planning your retirement around the wrong inflation number. If you budget for 4% growth in expenses, but healthcare actually grows at 14%, your retirement corpus will run dry much faster than you expect.
Three Lessons to Pull from the Reality Check
Separate medical inflation from general inflation — They behave differently and must be planned for separately.
Don’t trust average numbers for personal planning — CPI measures a basket of goods that may have little to do with your actual life expenses.
Factor in worst-case scenarios — Health costs can explode suddenly; your plan must survive the shock.
How to Prepare for the Real World, Not Just the Official One
Start building a health-focused retirement fund alongside your general retirement corpus.
Use investments that can beat higher inflation — equity mutual funds for long-term growth, with debt instruments for stability.
Lock in health insurance early — younger, healthier applicants get better premiums and coverage.
Review your plan yearly — adjust for real-world prices, not just the official inflation rate.
Final Word
The government’s inflation chart may make the economy look calm, but your wallet knows the real story. Prices at the supermarket and bills at the hospital don’t always match the CPI report.
If you plan for retirement based only on the “official” inflation rate, you might end up with a beautiful plan on paper and an empty bank account in reality. The smart move? Plan for the numbers you feel, not just the numbers you read.