Value of $100 in 2021, adjusted to 2023

What happened to prices between 2021 and 2023

Between 2021 and 2023, the Consumer Price Index went from 270.97 to 304.702. Cumulatively, prices increased 12.4%, which works out to an average of 6.04% per year. Put differently, a dollar in 2021 bought what $0.89 buys in 2023: the 2021 dollar lost 11.1% of its purchasing power over these 2 years.

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.

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The destination year: 2023

In 2023, prices rose 4.1% and $100 from 2021 had the buying power of $112; the year's average CPI of 304.702 is the level behind every 2023 figure on this page.

2023 was the year inflation came down without a recession. Consumer prices rose 4.1% on average, roughly half of 2022’s 8.0%, and the December-to-December rate fell to 3.4%. Gasoline averaged $3.52 a gallon, well below the 2022 average, and supply-chain pressure on goods eased. Shelter, restaurant meals, and other services stayed expensive, so the CPI kept rising at a rate well above the pre-pandemic pace.

The Federal Reserve completed its rate-hiking campaign in July, taking the policy rate to 5.25–5.50%, the highest level in 22 years. The effects showed up in banking: Silicon Valley Bank failed in March after rate increases eroded the value of its bond portfolio, the second-largest bank failure in U.S. history at the time. Despite that, unemployment stayed under 4% all year.

Median household income was $80,610 according to the Census Bureau. The federal minimum wage stayed at $7.25, and a first-class stamp rose to 66 cents in July.

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