Value of $100 in 1994, adjusted to 2016

What happened to prices between 1994 and 2016

Between 1994 and 2016, the Consumer Price Index went from 148.2 to 240.007. Cumulatively, prices increased 61.9%, which works out to an average of 2.22% per year. Put differently, a dollar in 1994 bought what $0.62 buys in 2016: the 1994 dollar lost 38.3% of its purchasing power over these 22 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: 2016

In 2016, prices rose 1.3% and $100 from 1994 had the buying power of $162; the year's average CPI of 240.007 is the level behind every 2016 figure on this page.

2016 opened with the cheapest oil in more than a decade and closed with a change in political direction. Crude fell to about $26 a barrel in February, and gasoline averaged $2.14 a gallon for the year, its lowest annual average since 2004. Headline inflation was 1.3%, a modest rebound from 2015’s 0.1%, though prices excluding food and energy rose faster, driven by rents and health care.

Median household income rose to $59,039, the second large gain in a row, and the median new home sold for about $307,800. The federal minimum wage held at $7.25, and a first-class stamp fell to 47 cents after a January rate cut, a rare decrease.

Two votes changed the outlook. Britain’s June decision to leave the European Union unsettled currency markets, and the U.S. election in November raised expectations of tax cuts, deficits, and faster growth, sending long-term interest rates higher. OPEC’s November output cut ended the oil slump, and the Federal Reserve made its second rate increase in December, to 0.50–0.75%.

More about inflation in 2016 →