Between 1981 and 2020, the Consumer Price Index went from 90.9 to 258.811.
Cumulatively, prices increased 184.7%, which works out to an average of
2.72% per year. Put differently, a dollar in 1981 bought what
$0.35 buys in 2020.
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 2020, by category:
Category
Avg. yearly inflation
$100 in 1981 →
All items (CPI-U)
2.72%
$285
Medical care
4.81%
$626
Housing
2.86%
$301
Core (all items less food & energy)
2.86%
$300
Food
2.73%
$285
Transportation
1.99%
$216
Energy
1.81%
$202
Apparel
0.55%
$124
Not shown because the BLS began these indexes after 1981: recreation (1993–), education & communication (1993–).
Long periods are sampled every 2 years; the calculator above covers any pair of years.
The destination year: 2020
2020 was the year the pandemic rewired the price data without triggering the
inflation spike that followed it. Consumer prices rose just 1.2% for the
year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads,
closed airports, and crushed energy demand. Oil told the starkest story: on
April 20, U.S. crude futures fell to about negative $37 a barrel, the first
negative settlement in the market’s history, as storage capacity ran out and no one
wanted the physical barrels. Gasoline followed it down, falling to about
$1.80 a gallon nationally that month before recovering to average $2.17 for
the year. Grocery prices moved the other way: pantry stocking and
meatpacking-plant disruptions pushed food-at-home costs up faster than
usual, a rare case of food and energy pulling the index in opposite
directions. Washington answered with the $2.2 trillion CARES Act, signed
March 27, which sent $1,200 payments to most adults and added $600 a week
to unemployment benefits as states ordered widespread business closures.
The Federal Reserve cut its policy rate to near zero in two emergency moves
that same month and pledged to buy Treasury and mortgage bonds “in the
amounts needed” to keep credit markets working, an open-ended commitment
beyond even its 2008 response. None of it showed up in the CPI yet: the
stimulus, the supply shocks, and the reopening whiplash that followed would
build into the fastest inflation in four decades over the next two years.
MLA: “Inflation from 1981 to 2020: $100 is worth $285 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1981-to-2020/
APA: InflationCalculator.com. Inflation from 1981 to 2020. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1981-to-2020/