$100 in 1981 is worth $118 in 1985,
because prices increased 18.4% over that period, an average of
4.31% a year.
$100 in 1981 has
the same buying power as
$118
in 1985
Detailed inflation statistics
Cumulative price change
18.4%
Average inflation rate
4.31% per year
Converted amount ($100 base)
$118
Price difference ($100 base)
$18.37
CPI in 1981
90.9
CPI in 1985
107.6
Inflation in 1981
10.32%
Inflation in 1985
3.56%
$100 in 1981 → 1985
$118
$100 in 1985 → 1981
$84.48
What happened to prices between 1981 and 1985
Between 1981 and 1985, the Consumer Price Index went from 90.9 to 107.6.
Cumulatively, prices increased 18.4%, which works out to an average of
4.31% per year. Put differently, a dollar in 1981 bought what
$0.84 buys in 1985: the 1981 dollar
lost 15.5% of its purchasing power over
these 4 years.
1981 was the year the inflation fever finally broke, at an extraordinary price.
Consumer prices rose 10.3%, the second year of back-to-back double-digit
inflation and the last time the U.S. would see one. To end it, Paul Volcker’s
Federal Reserve drove its policy rate above 19% and let borrowing costs go
where they may: a 30-year mortgage cost more than 18% by autumn, car loans and
business credit froze, and homebuilders mailed the Fed two-by-fours in protest.
The squeeze tipped the economy into recession in July, the deep 1981–82
downturn that would push unemployment past 10%. But it worked. Inflation fell
by nearly half within a year and to under 4% by 1983, the disinflation that
defined the following two decades. Even the price of mailing a letter told the
year’s story: postage went up twice in eight months.
Every 1981 amount converts to 1985 at the same ratio, 1.18: $1,000 becomes
$1,184, and $10,000 becomes $11,837.
Amount in 1981
Value in 1985
$1.00
$1.18
$5.00
$5.92
$10.00
$11.84
$20.00
$23.67
$50.00
$59.19
$100
$118
$500
$592
$1,000
$1,184
$5,000
$5,919
$10,000
$11,837
$100,000
$118,372
$1,000,000
$1,183,718
Inflation by spending category, 1981–1985
Between 1981 and 1985, medical care rose the most, up 36.9%, while energy rose the least, up 4.0%, against 18.4% for all items. The headline number is an average; here is what $100 of 1981
spending costs in 1985, by category:
Category
Avg. yearly inflation
$100 in 1981 →
All items (CPI-U)
4.31%
$118
Medical care
8.17%
$137
Core (all items less food & energy)
5.16%
$122
Housing
4.47%
$119
Transportation
3.37%
$114
Food
3.06%
$113
Apparel
2.45%
$110
Energy
0.98%
$104
Not shown because the BLS began these indexes after 1981: recreation (1993–), education & communication (1993–).
Year by year: CPI and the value of $100 from 1981
$100 from 1981 had already become $110 by
1983, on its way to $118 in 1985; each row shows the CPI, that
year's inflation rate, and the running value.
Within the span, inflation peaked at 6.2% in 1982, and the smallest rise was 3.2% in 1983.
In 1985, prices rose 3.6% and $100 from 1981 had the buying
power of $118; the year's average CPI of 107.6 is the level
behind every 1985 figure on this page.
By 1985, low inflation had become the norm rather than the exception.
Consumer prices rose 3.6% for the year, the fourth straight year in the
3-6% range following the double-digit spikes of 1980 and 1981, proof that
the disinflation had held rather than merely paused, as it had after
previous recessions. Overseas, the dollar had become a problem of its own:
years of high U.S. interest rates had pulled in foreign capital and pushed
the dollar’s value up so far that American exporters were losing business
abroad, widening the trade deficit. In September, the finance ministers of
the U.S., Japan, West Germany, France, and the United Kingdom met at New
York’s Plaza Hotel and agreed to coordinate a managed decline of the
dollar; it fell roughly 25% against major currencies over the following two
years. At home, Congress responded to a federal deficit that had roughly
tripled since 1980 by passing the Gramm-Rudman-Hollings Act in December,
setting binding targets to shrink the deficit with automatic
across-the-board cuts if lawmakers missed them. Households felt the calmer
economy in small ways: first-class postage rose to 22 cents in February,
its first increase since November 1981, after nearly four years at 20
cents.
MLA: “Inflation from 1981 to 1985: $100 is worth $118 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1981-to-1985/
APA: InflationCalculator.com. Inflation from 1981 to 1985. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1981-to-1985/