Buying power of $1 in 1940

This chart shows calculation of buying power equivalence, often referred to as "the value of a dollar" over time for $1 in 1940 (price index tracking began in 1635).

According to the Bureau of Labor Statistics, each of these USD amounts below is equal in terms of what it could buy at the time:

Inflation by City

Inflation can vary widely by city, even within the United States. Here's how some cities fared in 1940 to 2018 (figures shown are purchasing power equivalents of $1):

• San Francisco, California: 4.07% average rate, $1 → $22.54, cumulative change of 2,153.83%
• Seattle, Washington: 3.95% average rate, $1 → $20.53, cumulative change of 1,952.73%
• Boston, Massachusetts: 3.87% average rate, $1 → $19.30, cumulative change of 1,830.16%
• New York: 3.82% average rate, $1 → $18.62, cumulative change of 1,761.50%
• Philadelphia, Pennsylvania: 3.74% average rate, $1 → $17.56, cumulative change of 1,655.59%
• Atlanta, Georgia: 3.74% average rate, $1 → $17.51, cumulative change of 1,650.53%
• Chicago, Illinois: 3.72% average rate, $1 → $17.24, cumulative change of 1,623.55%
• Houston, Texas: 3.71% average rate, $1 → $17.08, cumulative change of 1,608.46%
• Detroit, Michigan: 3.65% average rate, $1 → $16.44, cumulative change of 1,544.48%

San Francisco, California experienced the highest rate of inflation during the 78 years between 1940 and 2018 (4.07%).

Detroit, Michigan experienced the lowest rate of inflation during the 78 years between 1940 and 2018 (3.65%).

Note that some locations showing 0% inflation may have not yet reported latest data.

Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1940 would be equivalent to £54.53 in 2018, an absolute change of £53.53 and a cumulative change of 5,353.43%.

In Canada, CA$1.00 in 1940 would be equivalent to CA$15.95 in 2018, an absolute change of CA$14.95 and a cumulative change of 1,495.12%.

Compare these numbers to the US's overall absolute change of $16.94 and total percent change of 1,693.62%.

Inflation by Spending Category

CPI is the weighted combination of many categories of spending that are tracked by the government. This chart shows the average rate of inflation for select CPI categories between 1940 and 2018.

Compare these values to the overall average of 3.77% per year:

It's important to note that not all categories may be tracked since 1940. This table and visualization use the earliest available data for each category.

How to Calculate Inflation Rate for $1, 1940 to 2018

This inflation calculator uses the following inflation rate formula:

Then plug in historical CPI values. The U.S. CPI was 14 in the year 1940 and 251.10683333333 in 2018:

$1 in 1940 has the same "purchasing power" or "buying power" as $17.94 in 2018.

To get the total inflation rate for the 78 years between 1940 and 2018, we use the following formula:

Plugging in the values to this equation, we get:

Comparison to S&P 500 Index

The average inflation rate of 3.77% has a compounding effect between 1940 and 2018. As noted above, this yearly inflation rate compounds to produce an overall price difference of 1,693.62% over 78 years.

To help put this inflation into perspective, if we had invested $1 in the S&P 500 index in 1940, our investment would be nominally worth approximately $3,394.28 in 2018. This is a return on investment of 339,327.73%, with an absolute return of $3,393.28.

These numbers are not inflation adjusted, so they are considered nominal. In order to evaluate the real return on our investment, we must calculate the return with inflation taken into account.

The compounding effect of inflation would account for 94.42% of returns ($3,204.09) during this period. This means the inflation-adjusted real return of our $1 investment is $189.19.

Data Source & Citation

Raw data for these calculations comes from the Bureau of Labor Statistics' Consumer Price Index (CPI), established in 1913. Inflation data from 1665 to 1912 is sourced from a historical study conducted by political science professor Robert Sahr at Oregon State University.

» Read more about inflation and investment.