Between 1914 and 2009, the Consumer Price Index went from 10 to 214.537.
Cumulatively, prices increased 2045.4%, which works out to an average of
3.28% per year. Put differently, a dollar in 1914 bought what
$0.05 buys in 2009.
Consumer prices barely moved in 1914, rising just 1.0% for the year, even as
the country’s financial plumbing was rebuilt from the ground up. The Federal
Reserve Banks, created by the Federal Reserve Act signed the previous
December, opened their doors on November 16, giving the U.S. a central bank
for the first time since the 1830s. Weeks earlier, the outbreak of war in
Europe had spooked the New York Stock Exchange into closing for more than
four months, the longest shutdown in its history, as officials worried
European investors would dump American securities for gold. Domestically, the
bigger story was labor: Henry Ford’s decision to pay factory workers $5 a
day, announced in January, roughly doubled wages on his assembly lines and
pushed other manufacturers to raise pay just to keep workers from leaving. A
first-class stamp still cost 2 cents, a price that had held since 1885 and
would keep holding for three more years, even as the war reshaping Europe
began pulling the American economy toward the sustained wartime inflation of
1917.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1914 spending costs in 2009, by category:
Category
Avg. yearly inflation
$100 in 1914 →
All items (CPI-U)
3.28%
$2,145
Food
3.28%
$2,137
Apparel
2.21%
$801
Not shown because the BLS began these indexes after 1914: core (all items less food & energy) (1957–), energy (1957–), housing (1967–), medical care (1935–), transportation (1935–), recreation (1993–), education & communication (1993–).
Long periods are sampled every 5 years; the calculator above covers any pair of years.
The destination year: 2009
2009 is the rarest kind of year in the modern price data: one where the cost
of living went down. The CPI fell 0.4%, the first full-year deflation
since 1955, as the Great Recession hollowed out demand and oil unwound from
its $147 spike the summer before. Gasoline that had cost over $4 a gallon in
July 2008 averaged $2.35 in 2009, and that energy collapse dragged the
12-month inflation rate to −2.1% by July, the deepest reading since 1950.
Policymakers treated falling prices not as relief but as a warning: deflation
raises the real weight of debt precisely when households are drowning in it,
which is why the Federal Reserve pinned interest rates near zero, began buying
bonds by the hundreds of billions, and Washington passed a $787 billion
stimulus. The medicine took: prices stabilized within a year, and 2009 remains
the textbook case of why central banks fear deflation more than moderate
inflation.
MLA: “Inflation from 1914 to 2009: $100 is worth $2,145 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1914-to-2009/
APA: InflationCalculator.com. Inflation from 1914 to 2009. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1914-to-2009/