Value of $100 in 1994, adjusted to 2015

What happened to prices between 1994 and 2015

Between 1994 and 2015, the Consumer Price Index went from 148.2 to 237.017. Cumulatively, prices increased 59.9%, which works out to an average of 2.26% per year. Put differently, a dollar in 1994 bought what $0.63 buys in 2015: the 1994 dollar lost 37.5% of its purchasing power over these 21 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: 2015

In 2015, prices rose 0.1% and $100 from 1994 had the buying power of $160; 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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