Is a raise below inflation a pay cut?

In real terms, yes. The increment needed just to stand still is shown on this page, and anything below it means your salary buys less than it did.

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Salary Increment Calculator

A raise in real terms. The real increase is not the nominal minus inflation: it is the ratio, and the difference matters more the larger both numbers are.

Also called: hike calculator, raise calculator, real salary increase.

New salary

₹13,20,000

₹13,20,000, an increase of ₹1,20,000. Against 6% inflation the real increase is 3.77%, worth ₹45,283 in today’s money.

Nominal increase

₹1,20,000

Per month

₹10,000

Real increase after inflation

3.77%

Real increase in value

₹45,283

Increment needed just to stand still

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

A ten percent raise against six percent inflation is not a four percent real gain. Dividing 1.10 by 1.06 gives 3.77%, because the inflation applies to the raised salary too. Subtracting is a decent approximation at low numbers and drifts badly at high ones, which is exactly where salary negotiations tend to happen.

real increase = (1 + increment) / (1 + inflation) - 1, not increment minus inflation

increment: Nominal increment (decimal)
inflation: Inflation over the same period (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

ten percent against six percent inflation

Current salary: ₹12,00,000
Increment offered: 10%
Inflation: 6%

New salary₹13,20,000

1.10 / 1.06 - 1, not 10 - 6

Open this example

a raise equal to inflation stands still

Current salary: ₹12,00,000
Increment offered: 6%
Inflation: 6%

New salary₹12,72,000

boundary: the definitional case

Open this example

no raise against inflation is a real cut

Current salary: ₹12,00,000
Increment offered: 0%
Inflation: 6%

New salary₹12,00,000

degenerate case

Open this example

Method and limits

What it assumes

The increment applies to the whole salary from the start of the period.

What it deliberately does not model

Personal inflation differs from the headline index, often substantially depending on rent and schooling.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Is a raise below inflation a pay cut?: In real terms, yes. The increment needed just to stand still is shown on this page, and anything below it means your salary buys less than it did.