This US Inflation Calculator uses the Consumer Price Index (CPI) data provided by the Bureau of Labor Statistics (BLS) to calculate the change in purchasing power of the US Dollar over time. By comparing the CPI of two different years, we can determine how much a specific dollar amount from the past would be worth in a later year, or vice versa.
How is inflation calculated?
The formula used is: Value in Target Year = Amount × (Target Year CPI / Original Year CPI)
The Consumer Price Index represents the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. When the CPI increases, it indicates inflation—meaning your money buys fewer goods than it previously did.
Realistic Examples:
Housing: If a house cost $20,000 in 1970, the inflation-adjusted price in 2024 would be over $160,000 based purely on CPI (though real estate often outpaces general inflation).
Wages: A salary of $5,000 in 1950 would have the same purchasing power as approximately $67,000 in 2024.
Groceries: A $1.00 loaf of bread in 1980 would equate to roughly $3.90 today in terms of general purchasing power.
Historical Context
The United States has seen various inflationary periods. The late 1970s and early 1980s saw "Great Inflation" where annual rates exceeded 13%. In contrast, the 2010s were characterized by very low inflation, often hovering around 1-2%. Understanding these shifts is crucial for long-term financial planning, retirement savings, and historical price comparisons.