This seems more of an accounting question than a PM one because budgets may have financial implications that come within the scope of accounting rules and regulations. If you are proposing to an external customer then maybe there are contractual implications as well. With cost estimates it is generally wise to state a range of numbers whenever possible. You can and should state clearly any underlying assumptions, whether inflation-adjusted or not.
I have never included inflation in my estimates, however I have always aimed to break down the spend profile so that the business can apply whatever inflation / Net Present Value / Discounted Cash Flow calculation they want to the costs and benefits of a project. If you do anything else you are setting yourself up to fail - especially if wage and / or price inflation (neither of which you can control) change dramatically during the life of the project. However, if you do this you should state clearly that the actual costs to be incurred are likely to be affected by inflation, so that the customer has no surprises in that area.
I personally do consider in total estimated project costs but not in specific item or activity. To do this I simply spread the non-inflated costs to the estimated duration and then compound it with inflation (For this I consider the inflation of overall economy which you would get from the central bank of your respective country). This is very simple approach and little conservative, other than this it would be very complicated to put inflation to every activity which would require the projection of cash flows and analyze the total estimated project costs. Rest as the above answer the future inflations are projected and it's not under anybody's control.
Moreover I presume the dynamics of any sector except certain sector like oil and gas doesn't change overnight , except in the even of war, riots or act of god. However we estimate little extra to keep factor of safety to our estimates. Hence, till over two to three year period of time there won't be such effect.