Value of $100 in 2016, adjusted to 2021

What happened to prices between 2016 and 2021

Between 2016 and 2021, the Consumer Price Index went from 240.007 to 270.97. Cumulatively, prices increased 12.9%, which works out to an average of 2.46% per year. Put differently, a dollar in 2016 bought what $0.89 buys in 2021: the 2016 dollar lost 11.4% of its purchasing power over these 5 years.

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 →

The destination year: 2021

In 2021, prices rose 4.7% and $100 from 2016 had the buying power of $113; the year's average CPI of 270.97 is the level behind every 2021 figure on this page.

2021 was the year inflation stopped being background noise. Consumer prices rose 4.7% on average for the year, and the pace kept building as the months went on: by December, the 12-month rate had reached 7.0%, the highest since 1982. The proximate cause was a supply chain that could not keep up with a fast-reopening economy. A global semiconductor shortage choked new car production and pushed used vehicle prices up by more than a third, the single largest line item in the year’s inflation math. Lumber, appliances, and shipping capacity told versions of the same story: demand snapped back faster than factories, ports, and truckers could handle it. Washington added fuel in March with the $1.9 trillion American Rescue Plan, on top of the relief already in the pipeline since 2020. For most of the year, the Federal Reserve called the price surge “transitory,” a temporary reopening effect expected to fade on its own, and held its policy rate near zero. By November, with inflation still climbing, the Fed reversed course and began winding down its bond purchases, the first step toward the rate hikes that would follow in 2022. Gas averaged $3.01 a gallon for the year, up from about $2.17 in 2020, while the federal minimum wage held at $7.25, unchanged since 2009. In hindsight, 2021 reads as the hinge year: the point where “transitory” inflation became the multi-year fight the Fed spent the next two years trying to win.

More about inflation in 2021 →