Purchasing power determines the value of any amount of money at a given time. For example, you can buy 5 grams of 24 karat gold for Rs. 25,000 now, but in five years you will only get about 4.5 grams. That is because of the rise in the gold price. The general rise in the price of daily use commodities is called inflation. This inflation causes the value of money to decline gradually. Usually, the rate of inflation is indicated as an annual percentage. For example, the inflation rate in India for the year 2020 was 6.2%. Meaning the purchasing power of Rs 100 you had in your pocket at the beginning of the year diminished by Rs 6.2 by the end of the year. So, if the average annual inflation rate is 5% p.a. Rs. 25,000 will be worth Rs. 9422 in 20 years.