Between 1981 and 1990, the Consumer Price Index went from 90.9 to 130.7.
Cumulatively, prices increased 43.8%, which works out to an average of
4.12% per year. Put differently, a dollar in 1981 bought what
$0.70 buys in 1990.
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.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1981 spending costs in 1990, by category:
Category
Avg. yearly inflation
$100 in 1981 →
All items (CPI-U)
4.12%
$144
Medical care
7.79%
$196
Core (all items less food & energy)
4.76%
$152
Housing
3.98%
$142
Food
3.93%
$141
Apparel
2.98%
$130
Transportation
2.90%
$129
Energy
0.49%
$105
Not shown because the BLS began these indexes after 1981: recreation (1993–), education & communication (1993–).
In 1990, the median U.S. household earned about $29,900, gas averaged $1.15 a
gallon, and mailing a letter cost a quarter. Inflation ran hot at 5.4% for the
year, its highest rate since 1982, pushed up by an oil shock after Iraq’s
invasion of Kuwait, and the economy tipped into recession that summer. It was
the last gasp of elevated inflation before the long calm of the 1990s.
MLA: “Inflation from 1981 to 1990: $100 is worth $144 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1981-to-1990/
APA: InflationCalculator.com. Inflation from 1981 to 1990. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1981-to-1990/