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# UK inflation rate in 1986: 3.40%

### Inflation in 1986 and Its Effect on Pound Value

Purchasing power decreased by 3.40% in 1986 compared to 1985. On average, you would have to spend 3.40% more money in 1986 than in 1985 for the same item.

In other words, £1 in 1985 is equivalent in purchasing power to about £1.03 in 1986.

The 1985 inflation rate was 6.08%. The inflation rate in 1986 was 3.40%. The 1986 inflation rate is higher compared to the average inflation rate of 3.29% per year between 1986 and 2019.

Inflation rate is calculated by change in the composite price index (CPI). The CPI in 1986 was 385.90. It was 373.20 in the previous year, 1985. The difference in CPI between the years is used by the Office for National Statistics to officially determine inflation.

 Average inflation rate 3.40% Converted amount (£1 base) £1.03 Price difference (£1 base) £0.03 CPI in 1985 373.200 CPI in 1986 385.900 Inflation in 1985 6.08% Inflation in 1986 3.40%

### How to Calculate Inflation Rate for £1, 1985 to 1986

This inflation calculator uses the following inflation rate formula:

CPI in 1986CPI in 1985
×
1985 GBP value
=
1986 GBP value

Then plug in historical CPI values. The UK CPI was 373.2 in the year 1985 and 385.9 in 1986:

385.9373.2
×
£1
=
£1.03

£1 in 1985 has the same "purchasing power" or "buying power" as £1.03 in 1986.

To get the total inflation rate for the 1 years between 1985 and 1986, we use the following formula:

CPI in 1986 - CPI in 1985CPI in 1985
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

385.9 - 373.2373.2
×
100
=
3%

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 composite price index published by the UK Office for National Statistics (ONS). A composite index is created by combining price data from several different published sources, both official and unofficial. The Consumer Price Index, normally used to compute inflation, has only been tracked since 1988. All inflation calculations after 1988 use the Office for National Statistics' Consumer Price Index, except for 2017, which is based on The Bank of England's forecast.

You may use the following MLA citation for this page: “Inflation Rate in 1986 | UK Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 22 Oct. 2019, https://www.officialdata.org/UK-inflation-rate-in-1986.