$100 in 1985 is worth $106 in 1987,
because prices increased 5.6% over that period, an average of
2.75% a year.
$100 in 1985 has
the same buying power as
$106
in 1987
Detailed inflation statistics
Cumulative price change
5.6%
Average inflation rate
2.75% per year
Converted amount ($100 base)
$106
Price difference ($100 base)
$5.58
CPI in 1985
107.6
CPI in 1987
113.6
Inflation in 1985
3.56%
Inflation in 1987
3.65%
$100 in 1985 → 1987
$106
$100 in 1987 → 1985
$94.72
What happened to prices between 1985 and 1987
Between 1985 and 1987, the Consumer Price Index went from 107.6 to 113.6.
Cumulatively, prices increased 5.6%, which works out to an average of
2.75% per year. Put differently, a dollar in 1985 bought what
$0.95 buys in 1987: the 1985 dollar
lost 5.3% of its purchasing power over
these 2 years.
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.
Every 1985 amount converts to 1987 at the same ratio, 1.06: $1,000 becomes
$1,056, and $10,000 becomes $10,558.
Amount in 1985
Value in 1987
$1.00
$1.06
$5.00
$5.28
$10.00
$10.56
$20.00
$21.12
$50.00
$52.79
$100
$106
$500
$528
$1,000
$1,056
$5,000
$5,279
$10,000
$10,558
$100,000
$105,576
$1,000,000
$1,055,762
Inflation by spending category, 1985–1987
Between 1985 and 1987, medical care rose the most, up 14.6%, while energy fell 12.8%, against 5.6% for all items. The headline number is an average; here is what $100 of 1985
spending costs in 1987, by category:
Category
Avg. yearly inflation
$100 in 1985 →
All items (CPI-U)
2.75%
$106
Medical care
7.06%
$115
Core (all items less food & energy)
4.09%
$108
Food
3.67%
$107
Housing
2.97%
$106
Apparel
2.63%
$105
Transportation
-0.47%
$99.06
Energy
-6.62%
$87.20
Not shown because the BLS began these indexes after 1985: recreation (1993–), education & communication (1993–).
Year by year: CPI and the value of $100 from 1985
$100 from 1985 had already become $102 by
1986, on its way to $106 in 1987; each row shows the CPI, that
year's inflation rate, and the running value.
Within the span, inflation peaked at 3.6% in 1987, and the smallest rise was 1.9% in 1986.
In 1987, prices rose 3.6% and $100 from 1985 had the buying
power of $106; the year's average CPI of 113.6 is the level
behind every 1987 figure on this page.
1987 tested whether the disinflation of the 1980s could survive its first
real shock. Paul Volcker, who had run the Federal Reserve since 1979 and
driven inflation down from 13.5% to routine mid-single digits, handed the
chairmanship to Alan Greenspan in August. Inflation for the year came in at
3.6%, edging up as the expansion entered its fifth year and a weaker
dollar, following 1985’s Plaza Accord, pushed up the price of imported
goods. Then, on October 19, the stock market delivered Greenspan’s first
crisis: the Dow Jones Industrial Average fell 22.6% in a single session,
still the largest one-day percentage drop in its history, as computer-driven
“portfolio insurance” trading amplified a global sell-off that had started
days earlier. The Fed responded within 24 hours, publicly pledging to
supply whatever liquidity the banking system needed, and the panic did not
spread to the broader economy. Growth continued and unemployment kept
falling through the rest of the year. It was an early demonstration of what
became known as the “Greenspan put,” a Fed willing to move fast and loosen
policy to contain financial shocks even while still watching inflation,
that shaped central banking for the next two decades.
MLA: “Inflation from 1985 to 1987: $100 is worth $106 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1985-to-1987/
APA: InflationCalculator.com. Inflation from 1985 to 1987. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1985-to-1987/