![]() ![]() ![]() The compounding effect of inflation would account for 64.62% of returns ($3,729.07) during this period. In order to evaluate the real return on our investment, we must calculate the return with inflation taken into account. These numbers are not inflation adjusted, so they are considered nominal. This is a return on investment of 5,670.77%, with an absolute return of $5,670.77 on top of the original $100. To help put this inflation into perspective, if we had invested $100 in the S&P 500 index in 1985, our investment would be nominally worth approximately $5,770.77 in 2023. As noted above, this yearly inflation rate compounds to produce an overall price difference of 182.65% over 38 years. The average inflation rate of 2.77% has a compounding effect between 19. Recall that the converted amount is $282.65 when all items including food and energy are measured. When using the core inflation measurement, $100 in 1985 is equivalent in buying power to $279.79 in 2023, a difference of $179.79. Core InflationĪlso of note is the Core CPI, which uses the standard CPI but omits the more volatile categories of food and energy.Ĭore inflation averaged 2.74% per year between 19 (vs all-CPI inflation of 2.77%), for an inflation total of 179.79%. The PCE measured -44.38% inflation compared to standard CPI.įor more information on the difference between PCE and CPI, see this analysis provided by the Bureau of Labor Statistics. Compare this to the standard CPI measurement, which equates $100 with $282.65. This means that the PCE Index equates $100 in 1985 with $238.27 in 2023, a difference of $138.27. The total PCE inflation between these dates was 138.27%. The PCE Price Index changed by 2.31% per year on average between 19. It measures the change in prices of goods and services purchased by consumers. Federal Reserve's preferred measure of inflation, compiled by the Bureau of Economic Analysis. ![]() Personal Consumption Expenditures (PCE) Inflation Below are a few examples of alternative measurements. The Consumer Price Index, used above, is the most common standard used globally.Īlternative measurements are sometimes used based on context and economic/political circumstances. Published rates of inflation will vary depending on methodology. There are multiple ways to measure inflation. In Canada, CA$100.00 in 1985 would be equivalent to CA$240.34 in 2023, an absolute change of CA$140.34 and a cumulative change of 140.34%. For comparison, in the UK £100.00 in 1985 would be equivalent to £387.66 in 2023, an absolute change of £287.66 and a cumulative change of 287.66%. Inflation can also vary widely by country. Note that some locations showing 0% inflation may have not yet reported latest data. St Louis, Missouri experienced the lowest rate of inflation during the 38 years between 19 (2.45%). San Diego, California experienced the highest rate of inflation during the 38 years between 19 (3.61%). Minneapolis-St Paul, Minnesota: 2.68% average rate, $100 → $266.36, cumulative change of 166.36%.Philadelphia, Pennsylvania: 2.70% average rate, $100 → $275.33, cumulative change of 175.33%.Miami-Fort Lauderdale, Florida: 3.01% average rate, $100 → $308.92, cumulative change of 208.92%. ![]() Here's how some cities fared in 1985 to 2023 (figures shown are purchasing power equivalents of $100): Inflation can vary widely by city, even within the United States. ![]()
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