The BLS Inflation Calculator uses the Consumer Price Index (CPI) provided by the Bureau of Labor Statistics to measure the changes in the purchasing power of the U.S. dollar over time. The CPI represents the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
To determine how much a specific dollar amount from a past year is worth today, we use the following formula:
Adjusted Value = (Original Amount) × (CPI in Target Year / CPI in Original Year)
Understanding the Consumer Price Index (CPI)
The Bureau of Labor Statistics (BLS) tracks thousands of items across categories like food, energy, housing, and medical care. When the CPI increases, it indicates inflation, meaning your dollar buys fewer goods and services than it did previously. Conversely, a decrease in CPI indicates deflation.
Practical Example: The $100 Question
Year
Original Amount
Adjusted for 2023
Cumulative Inflation
1970
$100.00
~$785.31
685.3%
1990
$100.00
~$232.14
132.1%
2010
$100.00
~$139.75
39.8%
Why Use an Inflation Calculator?
Using a BLS-based tool is essential for several financial tasks:
Salary Negotiations: Check if a raise actually beats the annual inflation rate or if you've effectively taken a pay cut.
Investment Analysis: Determine the real return on an investment after accounting for the loss of purchasing power.
Historical Research: Compare costs of living from different eras, such as the price of a home in 1950 vs. today.
Contract Adjustments: Many long-term business contracts include "escalation clauses" based on CPI data to ensure payments stay fair as prices rise.