Inflation And Real Value Of Money

Money invested in real estate can frequently be a hedge against inflation. Even in times of low inflation, the cost of goods increases over time. Real estate values tend to follow in the same way. The piece of real estate Madeline invested in may appreciate more than the $628.89 she is earning on her invested money.

For a second straight instance, the annual pace of United States inflation ran the quickest in nearly 13 years, according to government data released Tuesday, July 13.

Food and energy prices maintained higher-than-desired increases from a month and a year earlier. Annual core inflation, which discounts both, posted its highest rate since late 1991. And again, used car and truck prices showed drastic gains.

The question still remains on whether the pick-up in inflation is transitory due to circumstances related to the pandemic. Continue reading Annual Inflation and Consumer Prices in June Rise Most Since 2008

Value of $1 from 1860 to 2021

$1 in 1860 is equivalent in purchasing power to about $32.73 today, an increase of $31.73 over 161 years.The dollar had an average inflation rate of 2.19% per year between 1860 and today, producing a cumulative price increase of 3,173.45%.

This means that today's prices are32.73 times higher thanaverage prices since 1860,according to the Bureau of Labor Statistics consumer price index.A dollar today only buys 3.06% of what it could buy back then.

The 1860 inflation rate was 0.00%. The current year-over-year inflation rate (2020 to 2021) is now 5.39%1.If this number holds, $1 today will be equivalent in buying power to $1.05 next year.The current inflation rate page gives more detail on the latest inflation rates.

Inflation from 1860 to 2021
Cumulative price change3,173.45%
Average inflation rate2.19%
Converted amount ($1 base)$32.73
Price difference ($1 base)$31.73
CPI in 18608.300
CPI in 2021271.696
Inflation in 18600.00%
Inflation in 20215.39%
$1 in 1860$32.73 in 2021
Annual Rate, the Bureau of Labor Statistics CPI
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Buying power of $1 in 1860

This chart shows a calculation of buying power equivalence for $1 in 1860 (price index tracking began in 1635).

For example, if you started with $1, you would need to end with $32.73 in order to 'adjust' for inflation (sometimes refered to as 'beating inflation').

When $1 is equivalent to $32.73 over time, that means that the 'real value' of a single U.S. dollar decreases over time. In other words, a dollar will pay for fewer items at the store.

This effect explains how inflation erodes the value of a dollar over time. By calculating the value in 1860 dollars, the chart below shows how $1 is worth less over 161 years.

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According to the Bureau of Labor Statistics, each of these USD amounts below is equal in terms of what it could buy at the time:

Dollar inflation: 1860-2021
YearDollar ValueInflation Rate
1860$1.00-
1861$1.066.02%
1862$1.2214.77%
1863$1.5224.75%
1864$1.8924.60%
1865$1.963.82%
1866$1.92-2.45%
1867$1.78-6.92%
1868$1.71-4.05%
1869$1.64-4.23%
1870$1.58-3.68%
1871$1.47-6.87%
1872$1.470.00%
1873$1.45-1.64%
1874$1.37-5.00%
1875$1.33-3.51%
1876$1.29-2.73%
1877$1.27-1.87%
1878$1.20-4.76%
1879$1.200.00%
1880$1.232.00%
1881$1.230.00%
1882$1.230.00%
1883$1.22-0.98%
1884$1.18-2.97%
1885$1.17-1.02%
1886$1.13-3.09%
1887$1.141.06%
1888$1.140.00%
1889$1.11-3.16%
1890$1.10-1.09%
1891$1.100.00%
1892$1.100.00%
1893$1.08-1.10%
1894$1.04-4.44%
1895$1.01-2.33%
1896$1.010.00%
1897$1.00-1.19%
1898$1.000.00%
1899$1.000.00%
1900$1.011.20%
1901$1.021.19%
1902$1.041.18%
1903$1.062.33%
1904$1.071.14%
1905$1.06-1.12%
1906$1.082.27%
1907$1.134.44%
1908$1.11-2.13%
1909$1.10-1.09%
1910$1.144.40%
1911$1.140.00%
1912$1.172.11%
1913$1.192.06%
1914$1.201.01%
1915$1.221.00%
1916$1.317.92%
1917$1.5417.43%
1918$1.8217.97%
1919$2.0814.57%
1920$2.4115.61%
1921$2.16-10.50%
1922$2.02-6.15%
1923$2.061.79%
1924$2.060.00%
1925$2.112.34%
1926$2.131.14%
1927$2.10-1.69%
1928$2.06-1.72%
1929$2.060.00%
1930$2.01-2.34%
1931$1.83-8.98%
1932$1.65-9.87%
1933$1.57-5.11%
1934$1.613.08%
1935$1.652.24%
1936$1.671.46%
1937$1.733.60%
1938$1.70-2.08%
1939$1.67-1.42%
1940$1.690.72%
1941$1.775.00%
1942$1.9610.88%
1943$2.086.13%
1944$2.121.73%
1945$2.172.27%
1946$2.358.33%
1947$2.6914.36%
1948$2.908.07%
1949$2.87-1.24%
1950$2.901.26%
1951$3.137.88%
1952$3.191.92%
1953$3.220.75%
1954$3.240.75%
1955$3.23-0.37%
1956$3.281.49%
1957$3.393.31%
1958$3.482.85%
1959$3.510.69%
1960$3.571.72%
1961$3.601.01%
1962$3.641.00%
1963$3.691.32%
1964$3.731.31%
1965$3.801.61%
1966$3.902.86%
1967$4.023.09%
1968$4.194.19%
1969$4.425.46%
1970$4.675.72%
1971$4.884.38%
1972$5.043.21%
1973$5.356.22%
1974$5.9411.04%
1975$6.489.13%
1976$6.865.76%
1977$7.306.50%
1978$7.867.59%
1979$8.7511.35%
1980$9.9313.50%
1981$10.9510.32%
1982$11.636.16%
1983$12.003.21%
1984$12.524.32%
1985$12.963.56%
1986$13.201.86%
1987$13.693.65%
1988$14.254.14%
1989$14.944.82%
1990$15.755.40%
1991$16.414.21%
1992$16.903.01%
1993$17.412.99%
1994$17.862.56%
1995$18.362.83%
1996$18.902.95%
1997$19.342.29%
1998$19.641.56%
1999$20.072.21%
2000$20.753.36%
2001$21.342.85%
2002$21.671.58%
2003$22.172.28%
2004$22.762.66%
2005$23.533.39%
2006$24.293.23%
2007$24.982.85%
2008$25.943.84%
2009$25.85-0.36%
2010$26.271.64%
2011$27.103.16%
2012$27.662.07%
2013$28.071.46%
2014$28.521.62%
2015$28.560.12%
2016$28.921.26%
2017$29.532.13%
2018$30.272.49%
2019$30.801.76%
2020$31.181.23%
2021$32.734.98%*
* Compared to previous annual rate. Not final. See inflation summary for latest 12-month trailing value.

This conversion table shows various other 1860 amounts in today's dollars, based on the 3,173.45% change in prices:

Conversion: 1860 dollars today
Initial valueEquivalent value
$1dollarin 1860$32.73dollarstoday
$5dollarsin 1860$163.67dollarstoday
$10dollarsin 1860$327.34dollarstoday
$50dollarsin 1860$1,636.72dollarstoday
$100dollarsin 1860$3,273.45dollarstoday
$500dollarsin 1860$16,367.23dollarstoday
$1,000dollarsin 1860$32,734.46dollarstoday
$5,000dollarsin 1860$163,672.29dollarstoday
$10,000dollarsin 1860$327,344.58dollarstoday
$50,000dollarsin 1860$1,636,722.89dollarstoday
$100,000dollarsin 1860$3,273,445.78dollarstoday
$500,000dollarsin 1860$16,367,228.92dollarstoday
$1,000,000dollarsin 1860$32,734,457.83dollarstoday

Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1860 would be equivalent to £124.73 in 2021, an absolute change of £123.73 and a cumulative change of 12,372.59%.

Compare these numbers to the US's overall absolute change of $31.73 and total percent change of 3,173.45%.

Inflation by Spending Category

CPI is the weighted combination of many categories of spending that are tracked by the government. Breaking down these categories helps explain the main drivers behind price changes. This chart shows the average rate of inflation for select CPI categories between 1860 and 2021.

Compare these values to the overall average of 2.19% per year:

CategoryAvg Inflation (%)Total Inflation (%)$1 in 1860 → 2021
Food and beverages3.8745,118.92452.19
Housing4.1569,729.63698.30
Apparel1.952,143.9722.44
Transportation3.2416,815.24169.15
Medical care4.69159,222.411,593.22
Recreation1.11491.205.91
Education and communication1.821,728.6818.29
Other goods and services4.93232,021.662,321.22

The graph below compares inflation in categories of goods over time. Click on a category such as 'Food' to toggle it on or off:

For all these visualizations, it's important to note that not all categories may have been tracked since 1860. This table and charts use the earliest available data for each category.

Inflation rates of specific categories

Medical Care· Housing· Rent· Food· More

Inflation-adjusted measures

S&P 500 price·S&P 500 earnings·Shiller P/E

How to Calculate Inflation Rate for $1 since 1860

Our calculations use the following inflation rate formula to calculate the change in value between 1860 and today:

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Then plug in historical CPI values. The U.S. CPI was 8.3 in the year 1860 and 271.696 in 2021:

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Does Inflation Reduce The Value Of Money

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$1 in 1860 has the same 'purchasing power' or 'buying power' as $32.73 in 2021.

To get the total inflation rate for the 161 years between 1860 and 2021, we use the following formula:

×
=

Plugging in the values to this equation, we get:

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News headlines from 1860

Politics and news often influence economic performance. Here's what was happening at the time:

How Does Inflation Affect The Value Of Money

  • Abraham Lincoln becomes the 16th President of the U.S.
  • Slavery ends in the Dutch East Indies.

Raw data for these calculations comes fromthe Bureau of Labor Statistics'Consumer Price Index(CPI), established in 1913. Inflation data from 1665 to1912 is sourced from a historical study conducted by political scienceprofessor Robert Sahr at Oregon State University.

Inflation And Real Value Of Money

You may use the following MLA citation for this page:“$1 in 1860 → 2021 Inflation Calculator.” Official Inflation Data, Alioth Finance, 27 Jul. 2021, https://www.officialdata.org/us/inflation/1860?amount=1.

Special thanks to QuickChart for their chart image API, which is used for chart downloads.

in2013dollars.com is a reference website maintained by the Official Data Foundation.

Inflation And Real Value Of Money
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