$100 in 1985 is worth $115 in 1989,
because prices increased 15.2% over that period, an average of
3.61% a year.
$100 in 1985 has
the same buying power as
$115
in 1989
Detailed inflation statistics
Cumulative price change
15.2%
Average inflation rate
3.61% per year
Converted amount ($100 base)
$115
Price difference ($100 base)
$15.24
CPI in 1985
107.6
CPI in 1989
124
Inflation in 1985
3.56%
Inflation in 1989
4.82%
$100 in 1985 → 1989
$115
$100 in 1989 → 1985
$86.77
What happened to prices between 1985 and 1989
Between 1985 and 1989, the Consumer Price Index went from 107.6 to 124.
Cumulatively, prices increased 15.2%, which works out to an average of
3.61% per year. Put differently, a dollar in 1985 bought what
$0.87 buys in 1989: the 1985 dollar
lost 13.2% of its purchasing power over
these 4 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 1989 at the same ratio, 1.15: $1,000 becomes
$1,152, and $10,000 becomes $11,524.
Amount in 1985
Value in 1989
$1.00
$1.15
$5.00
$5.76
$10.00
$11.52
$20.00
$23.05
$50.00
$57.62
$100
$115
$500
$576
$1,000
$1,152
$5,000
$5,762
$10,000
$11,524
$100,000
$115,242
$1,000,000
$1,152,416
Inflation by spending category, 1985–1989
Between 1985 and 1989, medical care rose the most, up 31.5%, while energy fell 7.2%, against 15.2% for all items. The headline number is an average; here is what $100 of 1985
spending costs in 1989, by category:
Category
Avg. yearly inflation
$100 in 1985 →
All items (CPI-U)
3.61%
$115
Medical care
7.09%
$132
Food
4.33%
$118
Core (all items less food & energy)
4.28%
$118
Housing
3.38%
$114
Apparel
3.09%
$113
Transportation
1.76%
$107
Energy
-1.85%
$92.81
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 $106 by
1987, on its way to $115 in 1989; each row shows the CPI, that
year's inflation rate, and the running value.
Within the span, inflation peaked at 4.8% in 1989, and the smallest rise was 1.9% in 1986.
In 1989, prices rose 4.8% and $100 from 1985 had the buying
power of $115; the year's average CPI of 124 is the level
behind every 1989 figure on this page.
1989 closed out a decade that began in economic crisis and ended in a long,
calmer expansion. Inflation for the year came in at 4.8%, higher than the
mid-decade lull but still roughly a third of the 13.5% peak that had opened
the decade in 1980. The federal minimum wage, unchanged at $3.35 an hour
since January 1981, had gone longer without an increase than at any point
since Congress created it, and had lost close to a third of its purchasing
power to inflation in the meantime; lawmakers would finally raise it to
$3.80 the following April. The decade’s other unfinished business came due
in August, when Congress passed FIRREA, the law that created the Resolution
Trust Corporation to seize and sell off the hundreds of savings and loan
institutions that a decade of deregulation and risky lending had left
insolvent, a bailout that eventually cost taxpayers over $100 billion. On
Wall Street, the recovery was already complete: the Dow Jones Industrial
Average closed 1989 at a record high, just over two years after Black
Monday’s 22.6% single-day crash, capping the bull market that had begun at
the Dow’s 776 low in August 1982. Between the S&L bailout, a wage floor
eroded by years without a raise, and a stock market at new highs, 1989
captured how unevenly the decade’s disinflation had been felt.
MLA: “Inflation from 1985 to 1989: $100 is worth $115 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1985-to-1989/
APA: InflationCalculator.com. Inflation from 1985 to 1989. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1985-to-1989/