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# U.S. inflation rate in 1894: -4.44%

### Inflation in 1894 and Its Effect on Dollar Value

Purchasing power increased by 4.44% in 1894 compared to 1893. On average, you would have to spend 4.44% less money in 1894 than in 1893 for the same item. This is an example of deflation.

In other words, \$1 in 1893 is equivalent in purchasing power to about \$0.96 in 1894.

The 1893 inflation rate was -1.10%. The inflation rate in 1894 was -4.44%. The 1894 inflation rate is lower compared to the average inflation rate of 2.75% per year between 1894 and 2019.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1894 was 8.60. It was 9.00 in the previous year, 1893. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation. Because the 1894 CPI is less than 1893 CPI, negative inflation (also known as deflation) has occurred.

 Average inflation rate -4.44% Converted amount (\$1 base) \$0.96 Price difference (\$1 base) \$-0.04 CPI in 1893 9.000 CPI in 1894 8.600 Inflation in 1893 -1.10% Inflation in 1894 -4.44%

### Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1893 would be equivalent to £0.99 in 1894, an absolute change of £-0.01 and a cumulative change of -1.14%.

Compare these numbers to the US's overall absolute change of \$-0.04 and total percent change of -4.44%.

### 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 1893 and 1894.

Compare these values to the overall average of -4.44% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1893 → 1894
Food 0.00 0.00 1.00
Shelter 0.00 0.00 1.00
Energy 0.00 0.00 1.00
Apparel 0.00 0.00 1.00
New vehicles 0.00 0.00 1.00
Used cars and trucks 0.00 0.00 1.00
Transportation services 0.00 0.00 1.00
Medical care services 0.00 0.00 1.00
Medical care commodities 0.00 0.00 1.00

It's important to note that not all categories may be tracked since 1893. This table and visualization use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1893 to 1894

This inflation calculator uses the following inflation rate formula:

CPI in 1894CPI in 1893
×
1893 USD value
=
1894 USD value

Then plug in historical CPI values. The U.S. CPI was 9 in the year 1893 and 8.6 in 1894:

8.69
×
\$1
=
\$0.96

\$1 in 1893 has the same "purchasing power" or "buying power" as \$0.96 in 1894.

To get the total inflation rate for the 1 years between 1893 and 1894, we use the following formula:

CPI in 1894 - CPI in 1893CPI in 1893
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

8.6 - 99
×
100
=
-4%

### Comparison to S&P 500 Index

To help put this inflation into perspective, if we had invested \$1 in the S&P 500 index in 1893, our investment would be nominally worth approximately \$0.84 in 1894. This is a return on investment of -15.86%, with an absolute return of \$-0.16.

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 -4.65% of returns (\$0.01) during this period. This means the inflation-adjusted real return of our \$1 investment is \$-0.17.

Investment in S&P 500 Index, 1893-1894
Original Amount Final Amount Change
Nominal \$1 \$0.84 -15.86%
Real
\$1 \$-0.17 -16.59%

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

• The first ever successful open heart surgery, without anaesthesia performed by Daniel Williams.
• New Zealand becomes the first nation to grant women the right to vote .
• The first national election where women were allowed to vote takes place at New Zealand's general election.

### 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: “Inflation Rate in 1894 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 15 Oct. 2019, https://www.officialdata.org/inflation-rate-in-1894.