$100 in 1985 is worth $110 in 1988,
because prices increased 9.9% over that period, an average of
3.21% a year.
$100 in 1985 has
the same buying power as
$110
in 1988
Detailed inflation statistics
Cumulative price change
9.9%
Average inflation rate
3.21% per year
Converted amount ($100 base)
$110
Price difference ($100 base)
$9.94
CPI in 1985
107.6
CPI in 1988
118.3
Inflation in 1985
3.56%
Inflation in 1988
4.14%
$100 in 1985 → 1988
$110
$100 in 1988 → 1985
$90.96
What happened to prices between 1985 and 1988
Between 1985 and 1988, the Consumer Price Index went from 107.6 to 118.3.
Cumulatively, prices increased 9.9%, which works out to an average of
3.21% per year. Put differently, a dollar in 1985 bought what
$0.91 buys in 1988: the 1985 dollar
lost 9.0% of its purchasing power over
these 3 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 1988 at the same ratio, 1.10: $1,000 becomes
$1,099, and $10,000 becomes $10,994.
Amount in 1985
Value in 1988
$1.00
$1.10
$5.00
$5.50
$10.00
$10.99
$20.00
$21.99
$50.00
$54.97
$100
$110
$500
$550
$1,000
$1,099
$5,000
$5,497
$10,000
$10,994
$100,000
$109,944
$1,000,000
$1,099,442
Inflation by spending category, 1985–1988
Between 1985 and 1988, medical care rose the most, up 22.1%, while energy fell 12.1%, against 9.9% for all items. The headline number is an average; here is what $100 of 1985
spending costs in 1988, by category:
Category
Avg. yearly inflation
$100 in 1985 →
All items (CPI-U)
3.21%
$110
Medical care
6.89%
$122
Core (all items less food & energy)
4.19%
$113
Food
3.83%
$112
Housing
3.24%
$110
Apparel
3.20%
$110
Transportation
0.72%
$102
Energy
-4.21%
$87.89
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 $110 in 1988; each row shows the CPI, that
year's inflation rate, and the running value.
Within the span, inflation peaked at 4.1% in 1988, and the smallest rise was 1.9% in 1986.
In 1988, prices rose 4.1% and $100 from 1985 had the buying
power of $110; the year's average CPI of 118.3 is the level
behind every 1988 figure on this page.
By 1988, the economic expansion that began in the ashes of the 1981-82
recession was in its sixth year, and the Federal Reserve was watching for
signs it had run too long. Inflation rose to 4.1%, up from 3.6% the year
before, while unemployment fell to its lowest level since 1974. Alan
Greenspan’s Fed responded by raising the federal funds rate through the
year, from about 6.5% to 8.5%, trying to cool demand before prices
accelerated the way they had in the 1970s. Households still felt the
difference between this expansion and the last one: gas held near 90 cents
a gallon, almost exactly its 1987 price, and median household income rose
to roughly $27,200. The one price that moved was postage, which rose from
22 to 25 cents in April, the fourth increase of the decade but a far
gentler pace than the string of increases in the late 1970s and early
1980s. In November, Vice President George H.W. Bush won the presidency on
the strength of the expansion, promising in his nomination speech to hold
the line on taxes. Both the boom and that pledge would run into trouble
within two years, as the Fed’s rate increases helped tip the economy toward
the 1990-91 recession.
MLA: “Inflation from 1985 to 1988: $100 is worth $110 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1985-to-1988/
APA: InflationCalculator.com. Inflation from 1985 to 1988. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1985-to-1988/