Value of $100 in 1985, adjusted to 2024

What happened to prices between 1985 and 2024

Between 1985 and 2024, the Consumer Price Index went from 107.6 to 313.689. Cumulatively, prices increased 191.5%, which works out to an average of 2.78% per year. Put differently, a dollar in 1985 bought what $0.34 buys in 2024: the 1985 dollar lost 65.7% of its purchasing power over these 39 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: 2024

In 2024, prices rose 2.9% and $100 from 1985 had the buying power of $292; the year's average CPI of 313.689 is the level behind every 2024 figure on this page.

2024 brought inflation close to normal without fully reaching it. Consumer prices rose 2.9% on average, the smallest yearly increase since 2020, and the December-to-December rate was also 2.9%. Gasoline averaged $3.30 a gallon, below 2023’s $3.52. Shelter stayed the biggest driver of the index, so the pace of price growth in categories that households can’t easily avoid, such as rent and insurance, lagged the drop in goods and energy costs.

The Federal Reserve declared progress in September, cutting its policy rate by half a point, the first reduction since the pandemic emergency, and then by a quarter point in November and again in December. Mortgage rates near 7% kept the housing market frozen for many would-be buyers.

Median household income was $83,730, the federal minimum wage stayed at $7.25, and a first-class stamp rose to 73 cents in July. After the November election, attention turned to how announced tariffs and tax policy might affect prices in 2025.

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