Inflation Calculator

How an inflation calculator actually works

There is no mystery in the arithmetic. The Bureau of Labor Statistics prices the same basket of goods and services every month and publishes the result as an index number. In 2025 that index sits near 322.6; in 1990 it was 130.7. To move money between two years you take the ratio of the two index values and multiply:

Adjusted amount = original amount x (CPI in target year / CPI in original year)

That single line covers both directions. If the target year is later, the ratio is greater than one and the dollar figure grows. If you run it backwards — asking what a 2025 salary would have been in 1985 dollars — the ratio falls below one and the figure shrinks. Nothing else changes, which is why this calculator accepts the years in either order.

Worked example: 00 in 1990

The ratio is 322.6 / 130.7 = 2.468, so 00 in 1990 buys what $246.82 buys in 2025. Prices rose 146.8% over those 35 years, which works out to 2.62% a year compounded. Notice how modest the annual figure looks next to the cumulative one — that gap is the whole reason inflation surprises people. A rate you would barely notice in a single year more than doubles a price level over a working lifetime.

Worked example: 0,000 in 2000

Run 2000 to 2025 and the ratio is 322.6 / 172.2 = 1.873. Ten thousand dollars becomes 8,734, total inflation of 87.3% at an average of 2.54% a year. This is the calculation to reach for when you are comparing a house price, a tuition bill or a starting salary from the turn of the century with today's. A $42,000 graduate salary in 2000 needs to be about $78,700 now just to stand still.

Worked example: a dollar in 1913

The series starts in 1913 at an index of 9.9, so a single 1913 dollar corresponds to $32.59 today. Flip it around and today's dollar is worth about three cents in 1913 money. Over 112 years that is an average of 3.16% a year — higher than the post-1990 average, because the run includes two world wars, the 1970s oil shocks and the double-digit years of 1979 to 1981.

What a dollar from each decade is worth in 2025

Two things stand out. First, the deflation of the early 1930s is real: prices fell 24% between 1929 and 1933, the only sustained decline in the whole series. Second, the calm looks recent. From 1995 to 2020 the index averaged close to 2%, then 2021 and 2022 added 8.0% in a single step — the fastest year since 1981 — which is why a 2015 dollar has lost more ground than a 1995 dollar did over its first decade.

Deciding which years to use

For salary comparisons, use the year the salary was actually paid and the current year; do not mix a mid-year offer with a calendar-year average and expect precision to the dollar. For long-running contracts, rent escalators and alimony clauses, check whether the agreement names a specific index — many specify CPI-U for a named metropolitan area rather than the US city average used here, and those regional series can diverge by several points over a decade. For historical curiosity — what a 1962 concert ticket or a 1948 car cost in today's money — the annual average is exactly the right series.

Limitations worth knowing

CPI-U is a national urban average. It does not know that rents in Austin behaved nothing like rents in Cleveland, and it does not track rural households at all. It is also a composite: healthcare and higher education have run far above the headline for thirty years while televisions, clothing and long-distance calls have fallen outright, so any single household's experience sits somewhere off the average.

The index also adjusts for quality. When a $500 laptop replaces a $500 laptop that was half as fast, BLS records part of that as a price decrease, which some critics argue understates the cost of simply staying current. And the basket's weights are updated periodically, so the 1913 basket is not the 2025 basket — comparisons spanning a century are directionally sound rather than precise. Use the number as a well-grounded estimate, not a legal figure.