$500 in 1985 → $1,171.18 in 2018

Inflation Calculator

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U.S. Inflation Rate, $500 in 1985 to 2018

According to the Bureau of Labor Statistics consumer price index, prices in 2018 are 134.24% higher than prices in 1985. The dollar experienced an average inflation rate of 2.61% per year during this period.

In other words, $500 in 1985 is equivalent in purchasing power to $1,171.18 in 2018, a difference of $671.18 over 33 years.

The 1985 inflation rate was 3.56%. The current inflation rate (2017 to 2018) is now 2.18%1. If this number holds, $500 today will be equivalent to $510.88 next year. The current inflation rate page gives more detail on the latest official inflation rates.


Inflation from 1985 to 2018
Cumulative price change 134.24%
Average inflation rate 2.61%
Converted amount ($500 base) $1,171.18
Price difference ($500 base) $671.18
CPI in 1985 107.600
CPI in 2018 252.038
Inflation in 1985 3.56%
Inflation in 2018 2.18%


U.S. Inflation since 1913
Annual Rate, U.S. Bureau of Labor Statistics CPI

Buying power of $500 since 1985

This chart shows calculations of buying power equivalence over time for $500 in 1985 (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:

Year USD Value Inflation Rate
1985 $500.00 3.56%
1986 $509.29 1.86%
1987 $527.88 3.65%
1988 $549.72 4.14%
1989 $576.21 4.82%
1990 $607.34 5.40%
1991 $632.90 4.21%
1992 $651.95 3.01%
1993 $671.47 2.99%
1994 $688.66 2.56%
1995 $708.18 2.83%
1996 $729.09 2.95%
1997 $745.82 2.29%
1998 $757.43 1.56%
1999 $774.16 2.21%
2000 $800.19 3.36%
2001 $822.96 2.85%
2002 $835.97 1.58%
2003 $855.02 2.28%
2004 $877.79 2.66%
2005 $907.53 3.39%
2006 $936.80 3.23%
2007 $963.49 2.85%
2008 $1,000.48 3.84%
2009 $996.92 -0.36%
2010 $1,013.27 1.64%
2011 $1,045.26 3.16%
2012 $1,066.89 2.07%
2013 $1,082.51 1.46%
2014 $1,100.07 1.62%
2015 $1,101.38 0.12%
2016 $1,115.27 1.26%
2017 $1,139.03 2.13%
2018 $1,171.18 2.82%*
* Compared to previous annual rate. Not final. See inflation summary for latest 12-month trailing value.

Inflation by City

Inflation can vary widely by city, even within the United States. Here's how some cities fared in 1985 to 2018 (figures shown are purchasing power equivalents of $500):

San Diego, California experienced the highest rate of inflation during the 33 years between 1985 and 2018 (3.52%).

St Louis, Missouri experienced the lowest rate of inflation during the 33 years between 1985 and 2018 (2.32%).

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 £500.00 in 1985 would be equivalent to £1,471.43 in 2018, an absolute change of £971.43 and a cumulative change of 194.29%.

In Canada, CA$500.00 in 1985 would be equivalent to CA$1,039.78 in 2018, an absolute change of CA$539.78 and a cumulative change of 107.96%.

Compare these numbers to the US's overall absolute change of $671.18 and total percent change of 134.24%.


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 1985 and 2018.

Compare these values to the overall average of 2.61% per year:

Category Avg Inflation (%) Total Inflation (%) $500 in 1985 → 2018
Food 2.69 140.04 1,200.20
Shelter 3.17 179.83 1,399.17
Energy 2.38 117.07 1,085.35
Apparel 0.56 20.09 600.44
New vehicles 0.99 38.20 691.00
Used cars and trucks 0.60 21.84 609.19
Transportation services 3.30 191.53 1,457.64
Medical care services 4.71 357.14 2,285.70
Medical care commodities 3.70 231.28 1,656.39

It's important to note that not all categories may be tracked since 1985. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $500 since 1985

This inflation calculator uses the following inflation rate formula:

CPI in 2018CPI in 1985
×
1985 USD value
=
2018 USD value

Then plug in historical CPI values. The U.S. CPI was 107.6 in the year 1985 and 252.038 in 2018:

252.038107.6
×
$500
=
$1,171.18

$500 in 1985 has the same "purchasing power" or "buying power" as $1,171.18 in 2018.

To get the total inflation rate for the 33 years between 1985 and 2018, we use the following formula:

CPI in 2018 - CPI in 1985CPI in 1985
×
100
=
Cumulative inflation rate (33 years)

Plugging in the values to this equation, we get:

252.038 - 107.6107.6
×
100
=
134%

Alternate Measurements of Inflation

The above data describe the CPI for all items. Also of note is the Core CPI, which measures inflation for all items except for the more volatile categories of food and energy. Core inflation averaged 2.63% per year between 1985 and 2018 (vs all-CPI inflation of 2.61%), for an inflation total of 135.49%.

When using the core inflation measurement, $500 in 1985 is equivalent in buying power to $1,177.43 in 2018, a difference of $677.43. Recall that for All Items, the converted amount is $1,171.18 with a difference of $671.18.

In 1985, core inflation was 4.38%.


Comparison to S&P 500 Index

The average inflation rate of 2.61% has a compounding effect between 1985 and 2018. As noted above, this yearly inflation rate compounds to produce an overall price difference of 134.24% over 33 years.

To help put this inflation into perspective, if we had invested $500 in the S&P 500 index in 1985, our investment would be nominally worth approximately $16,476.85 in 2018. This is a return on investment of 3,195.37%, with an absolute return of $15,976.85.

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 57.31% of returns ($9,156.02) during this period. This means the inflation-adjusted real return of our $500 investment is $6,820.83.

Investment in S&P 500 Index, 1985-2018
Original Amount Final Amount Change
Nominal $500 $16,476.85 3,195.37%
Real
Inflation Adjusted
$500 $6,820.83 1,364.17%


News headlines from 1985

Politics and news often influence economic performance. Here's what was happening at the time:

  • Mikhail Gorbachev replaces Konstantin Chernenko as leader of the Soviet Union.
  • Earthquake with a magnitude of 8.1 rocks Mexico City and kills 10,000 people, leaving over 250,000 homeless.
  • Mikhail Gorbachev (leader of the Soviet Union) and Ronald Reagan (President of the United States) meet for the first time.
  • Ernie Wise makes the first mobile phone call in the UK.

Data Source & Citation

Raw data for these calculations comes from the Bureau of Labor Statistics' (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.

You may use the following MLA citation for this page: “$500 in 1985 → 2018 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 13 Dec. 2018, https://www.officialdata.org/1985-dollars-in-2018?amount=500.

in2013dollars.com is a reference website maintained by the Official Data Foundation.


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