Value of $100 in 1995, adjusted to 2016

What happened to prices between 1995 and 2016

Between 1995 and 2016, the Consumer Price Index went from 152.4 to 240.007. Cumulatively, prices increased 57.5%, which works out to an average of 2.19% per year. Put differently, a dollar in 1995 bought what $0.63 buys in 2016: the 1995 dollar lost 36.5% of its purchasing power over these 21 years.

In 1995, gas averaged $1.15 a gallon, a new home cost roughly $133,900, and the median household earned about $34,100. Inflation ran at 2.8% for the year, little changed from 1994, as the Federal Reserve shifted from raising rates to cutting them. Having lifted its policy rate six times the year before, the Fed judged by July that the economy had cooled enough on its own, and trimmed rates instead, an outcome economists would later point to as a rare soft landing. The year opened with a currency crisis: Mexico’s peso lost roughly half its value against the dollar in a matter of weeks, and the U.S. Treasury and the IMF assembled a $50 billion rescue package, controversial in Congress, to stabilize it and keep the crisis from spreading to other emerging markets. Closer to home, a budget standoff between President Clinton and the Republican Congress shut down federal agencies twice, first for five days in November and then for 21 days spanning December into January 1996, the longest shutdown up to that point. The Postal Service raised the cost of a first-class stamp to 32 cents in January. Low, steady inflation was about the only calm part of 1995’s economic story.

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The destination year: 2016

In 2016, prices rose 1.3% and $100 from 1995 had the buying power of $157; 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%.

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