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# U.S. inflation rate in 1895: -2.33%

### Inflation in 1895 and Its Effect on Dollar Value

Purchasing power increased by 2.33% in 1895 compared to 1894. On average, you would have to spend 2.33% less money in 1895 than in 1894 for the same item. This is an example of deflation.

In other words, \$1 in 1894 is equivalent in purchasing power to about \$0.98 in 1895.

The 1894 inflation rate was -4.44%. The inflation rate in 1895 was -2.33%. The 1895 inflation rate is lower compared to the average inflation rate of 2.80% per year between 1895 and 2019.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1895 was 8.40. It was 8.60 in the previous year, 1894. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation. Because the 1895 CPI is less than 1894 CPI, negative inflation (also known as deflation) has occurred.

 Average inflation rate -2.33% Converted amount (\$1 base) \$0.98 Price difference (\$1 base) \$-0.02 CPI in 1894 8.600 CPI in 1895 8.400 Inflation in 1894 -4.44% Inflation in 1895 -2.33%

### Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1894 would be equivalent to £0.99 in 1895, an absolute change of £-0.01 and a cumulative change of -1.15%.

Compare these numbers to the US's overall absolute change of \$-0.02 and total percent change of -2.33%.

### 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 1894 and 1895.

Compare these values to the overall average of -2.33% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1894 → 1895
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 1894. This table and visualization use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1894 to 1895

This inflation calculator uses the following inflation rate formula:

CPI in 1895CPI in 1894
×
1894 USD value
=
1895 USD value

Then plug in historical CPI values. The U.S. CPI was 8.6 in the year 1894 and 8.4 in 1895:

8.48.6
×
\$1
=
\$0.98

\$1 in 1894 has the same "purchasing power" or "buying power" as \$0.98 in 1895.

To get the total inflation rate for the 1 years between 1894 and 1895, we use the following formula:

CPI in 1895 - CPI in 1894CPI in 1894
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

8.4 - 8.68.6
×
100
=
-2%

### 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 1894, our investment would be nominally worth approximately \$1.09 in 1895. This is a return on investment of 8.81%, with an absolute return of \$0.09.

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 -2.38% of returns (\$0.00) during this period. This means the inflation-adjusted real return of our \$1 investment is \$0.09.

Investment in S&P 500 Index, 1894-1895
Original Amount Final Amount Change
Nominal \$1 \$1.09 8.81%
Real
\$1 \$0.09 9.02%

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

• Thomas Edison's kinetoscope is shown to the public for the first time.
• Initiated by Baron Pierre de Coubertin, the International Olympic Committee is founded in Paris.
• Shibasaburo Kitasato, a Japanese scientist, discovers the cause of the Bubonic Plague and publishes his discovery in ‘The Lancet’.
• The first ever drink driving fine, is delivered to a London taxi driver called George Smith.
• Doctor Roux of Paris announces the creation of a diphtheria vaccine.

### 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 1895 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 23 Oct. 2019, https://www.officialdata.org/inflation-rate-in-1895.