One must keep in mind that the regular expenses as well as the cost for various financial goals rise over a period. If the inflation is at 6% per year, the cost of a goal doubles over approximately 12 years. However, if the inflation is at 7%, the doubling happens roughly in ten years.
Now when inflation is at 7% and you seek total safety of the principal amount, you would be able to invest in avenues that offer returns very close to the inflation. Adjust for taxes on the investment returns and your post-tax investment returns are lower than inflation.
Let us look at some simple numbers:
If inflation is 7% per year, and you can buy something for Rs. 100 now, you would need Rs. 107 to buy the same
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