$100 in 1988 is worth $105 in 1989,
because prices increased 4.8% over that period, an average of
4.82% a year.
$100 in 1988 has
the same buying power as
$105
in 1989
Detailed inflation statistics
Cumulative price change
4.8%
Average inflation rate
4.82% per year
Converted amount ($100 base)
$105
Price difference ($100 base)
$4.82
CPI in 1988
118.3
CPI in 1989
124
Inflation in 1988
4.14%
Inflation in 1989
4.82%
$100 in 1988 → 1989
$105
$100 in 1989 → 1988
$95.40
What happened to prices between 1988 and 1989
Between 1988 and 1989, the Consumer Price Index went from 118.3 to 124.
Cumulatively, prices increased 4.8%, which works out to an average of
4.82% per year. Put differently, a dollar in 1988 bought what
$0.95 buys in 1989: the 1988 dollar
lost 4.6% of its purchasing power over
these 1 years.
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.
Every 1988 amount converts to 1989 at the same ratio, 1.05: $1,000 becomes
$1,048, and $10,000 becomes $10,482.
Amount in 1988
Value in 1989
$1.00
$1.05
$5.00
$5.24
$10.00
$10.48
$20.00
$20.96
$50.00
$52.41
$100
$105
$500
$524
$1,000
$1,048
$5,000
$5,241
$10,000
$10,482
$100,000
$104,818
$1,000,000
$1,048,183
Inflation by spending category, 1988–1989
Between 1988 and 1989, medical care rose the most, up 7.7%, while apparel rose the least, up 2.8%, against 4.8% for all items. The headline number is an average; here is what $100 of 1988
spending costs in 1989, by category:
Category
Avg. yearly inflation
$100 in 1988 →
All items (CPI-U)
4.82%
$105
Medical care
7.72%
$108
Food
5.84%
$106
Energy
5.60%
$106
Transportation
4.97%
$105
Core (all items less food & energy)
4.54%
$105
Housing
3.80%
$104
Apparel
2.77%
$103
Not shown because the BLS began these indexes after 1988: recreation (1993–), education & communication (1993–).
Year by year: CPI and the value of $100 from 1988
$100 from 1988grew to $105 by 1989; each row
shows the CPI, that year's inflation rate, and the running value.
In 1989, prices rose 4.8% and $100 from 1988 had the buying
power of $105; 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 1988 to 1989: $100 is worth $105 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1988-to-1989/
APA: InflationCalculator.com. Inflation from 1988 to 1989. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1988-to-1989/