3. Lifestyle Inflation

As an individual's income increases, there is a gradual improvement in lifestyle—bigger house, branded clothes, better car. These additional expenses result in what is termed as lifestyle inflation.

So the expenses increase not just on account of the rise in prices, but also due to a better lifestyle. Since the rise depends on the individual, it is not possible to put a number that is applicable to all. However, one must consider it while computing long-term goals, such as retirement planning or children's wedding.

4. Medical Inflation

Medical inflation is relatively under control in India due to the government restrictions on drug price rise and technological innovation to keep a tab on medical equipment costs.

However, medical expenses are bound to rise as you grow older and you need to consider a higher rate of inflation so that you face any problem during your sunset years.

5. Education Inflation

Though education inflation is also a subset of headline inflation, it only measures the increase in cost of education and stationery.

It is essential to provide for this inflation while planning for your child's studies because most of the higher education is now subsidized and the subsidy might not be available by the time your ward reaches adulthood.