Value of $100 in 1985, adjusted to 2015

What happened to prices between 1985 and 2015

Between 1985 and 2015, the Consumer Price Index went from 107.6 to 237.017. Cumulatively, prices increased 120.3%, which works out to an average of 2.67% per year. Put differently, a dollar in 1985 bought what $0.45 buys in 2015: the 1985 dollar lost 54.6% of its purchasing power over these 30 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.

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The destination year: 2015

In 2015, prices rose 0.1% and $100 from 1985 had the buying power of $220; the year's average CPI of 237.017 is the level behind every 2015 figure on this page.

2015 was almost a year with no inflation at all. Consumer prices rose 0.1%, the smallest increase since the 2009 decline, because energy prices kept falling. Gasoline averaged $2.45 a gallon, down from $3.37 in 2014, and a strong dollar made imported goods cheaper. The picture was different outside food and energy: core prices rose about 1.8% as rents and medical costs climbed.

Incomes finally showed real progress. Median household income reached $56,516, a large jump from $53,657, and the median new home sold for about $296,400. The federal minimum wage stayed at $7.25, and a first-class stamp stayed at 49 cents.

The Federal Reserve chose December to end its zero-rate policy, raising the target range to 0.25–0.50% for the first time since 2006. It moved even though headline inflation was far under 2%, arguing that the drag from energy was temporary. Earlier, a currency shift in China in August had shaken global markets and pushed oil below $40 a barrel. Prices in 2015 ended the year barely above their 2014 level.

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