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Considering inflation when repaying a loan

Fatwaa ID: 802

Question:
Assalaamu ‘alaykum warahmatullah. Is it permissible to make loan contracts, basing the loan repayments only upon the principle adjusted according to inflation data from the Bureau of Labor Statistics (for here in the US)? Would that be considered interest?

Answer:
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

When returning a loan, one will only pay back the amount borrowed. Inflation will not be considered. Any additional amount payed in consideration of the inflation will be regarded as riba. In the enquired situation, the contract in question will be impermissible and invalid.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

08/16/1444 AH – 03/08/2023 CE | AMG3-3477

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


الدر المختار وحاشية ابن عابدين (5/ 162)
وإن استقرض دانق فلوس أو نصف درهم فلوس، ثم رخصت أو غلت لم يكن عليه إلا مثل عدد الذي أخذه، وكذلك لو قال أقرضني عشرة دراهم غلة بدينار، فأعطاه عشرة دراهم فعليه مثلها، ولا ينظر إلى غلاء الدراهم، ولا إلى رخصها.

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