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# UK inflation rate in 1989: 7.78%

### Inflation in 1989 and Its Effect on Pound Value

Purchasing power decreased by 7.78% in 1989 compared to 1988. On average, you would have to spend 7.78% more money in 1989 than in 1988 for the same item.

In other words, £1 in 1988 is equivalent in purchasing power to about £1.08 in 1989.

The 1988 inflation rate was 4.90%. The inflation rate in 1989 was 7.78%. The 1989 inflation rate is higher compared to the average inflation rate of 3.06% per year between 1989 and 2019.

Inflation rate is calculated by change in the composite price index (CPI). The CPI in 1989 was 454.50. It was 421.70 in the previous year, 1988. The difference in CPI between the years is used by the Office for National Statistics to officially determine inflation.

 Average inflation rate 7.78% Converted amount (£1 base) £1.08 Price difference (£1 base) £0.08 CPI in 1988 421.700 CPI in 1989 454.500 Inflation in 1988 4.90% Inflation in 1989 7.78%

### How to Calculate Inflation Rate for £1, 1988 to 1989

This inflation calculator uses the following inflation rate formula:

CPI in 1989CPI in 1988
×
1988 GBP value
=
1989 GBP value

Then plug in historical CPI values. The UK CPI was 421.7 in the year 1988 and 454.5 in 1989:

454.5421.7
×
£1
=
£1.08

£1 in 1988 has the same "purchasing power" or "buying power" as £1.08 in 1989.

To get the total inflation rate for the 1 years between 1988 and 1989, we use the following formula:

CPI in 1989 - CPI in 1988CPI in 1988
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

454.5 - 421.7421.7
×
100
=
8%

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

• The USSR withdraws its troops from Afghanistan.
• Iran and Iraq announce a ceasefire after 8 years of war.
• Approximately 50,000 Kurdish civilians and soldiers are killed by Iraq.
• Mikhail Gorbachev Chairman becomes president of the USSR.
• Benazir Bhutto becomes the first female leader of a Muslim country in Pakistan.

### 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 1989 | UK Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 16 Sep. 2019, https://www.officialdata.org/UK-inflation-rate-in-1989.