Value of $100 in 1994, adjusted to 2013

What happened to prices between 1994 and 2013

Between 1994 and 2013, the Consumer Price Index went from 148.2 to 232.957. Cumulatively, prices increased 57.2%, which works out to an average of 2.41% per year. Put differently, a dollar in 1994 bought what $0.64 buys in 2013: the 1994 dollar lost 36.4% of its purchasing power over these 19 years.

Gas averaged $1.11 a gallon in 1994, a new home cost roughly $130,000, and the median household earned about $32,300. Inflation ran at 2.6% for the year, the calmest reading since the mid-1980s, even as the Federal Reserve spent the year raising interest rates precisely to keep it that way. Chair Alan Greenspan’s Fed lifted the federal funds rate from 3% to 5.5% over six moves, a preemptive tightening campaign meant to head off inflation before it built rather than react to it after the fact. The bond market, unprepared for such a rapid climb, sold off sharply, and the higher rates rippled into places few had expected: Orange County, California, whose investment pool had bet heavily on rates staying low, filed for bankruptcy in December after losing an estimated $1.7 billion, the largest municipal bankruptcy in the country’s history at the time. On the trade front, NAFTA took effect January 1, phasing out tariffs on thousands of goods moving between the U.S., Mexico, and Canada, the start of a schedule that would eliminate most remaining barriers over the following decade. It was a year that showed inflation control could have its own costs, paid out in the bond market and, in Orange County’s case, a bankruptcy court.

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The destination year: 2013

In 2013, prices rose 1.5% and $100 from 1994 had the buying power of $157; the year's average CPI of 232.957 is the level behind every 2013 figure on this page.

2013 was a low-inflation year with a lot of noise around the Federal Reserve. Consumer prices rose 1.5%, below the Fed’s 2% target, and gasoline eased to an average of $3.51 a gallon. Housing was the exception: the median new home sold for about $268,900, up sharply from $245,200 in 2012, as the market recovered from its post-crisis bottom.

The Fed dominated the news. Chairman Ben Bernanke’s May comments about slowing bond purchases pushed long-term interest rates up by roughly a percentage point that summer, and mortgages became more expensive within weeks. In December the Fed finally announced a first small cut to its purchases while promising to keep short-term rates near zero for a long time.

Washington added its own disruption. A 16-day government shutdown in October delayed data releases and left a hole in that month’s CPI collection. Median household income was reported at $53,585, the federal minimum wage stayed at $7.25, and a first-class stamp cost 46 cents. The decade’s pattern was taking shape: slow price growth, ultra-low interest rates, and a labor market that improved gradually.

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