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# U.S. inflation rate in 1907: 4.44%

### Inflation in 1907 and Its Effect on Dollar Value

Purchasing power decreased by 4.44% in 1907 compared to 1906. On average, you would have to spend 4.44% more money in 1907 than in 1906 for the same item.

In other words, \$1 in 1906 is equivalent in purchasing power to about \$1.04 in 1907.

The 1906 inflation rate was 2.27%. The inflation rate in 1907 was 4.44%. The 1907 inflation rate is higher compared to the average inflation rate of 3.00% per year between 1907 and 2019.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1907 was 9.40. It was 9.00 in the previous year, 1906. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.

 Average inflation rate 4.44% Converted amount (\$1 base) \$1.04 Price difference (\$1 base) \$0.04 CPI in 1906 9.000 CPI in 1907 9.400 Inflation in 1906 2.27% Inflation in 1907 4.44%

### Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1906 would be equivalent to £1.01 in 1907, an absolute change of £0.01 and a cumulative change of 1.08%.

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 1906 and 1907.

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

Category Avg Inflation (%) Total Inflation (%) \$1 in 1906 → 1907
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 1906. This table and visualization use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1906 to 1907

This inflation calculator uses the following inflation rate formula:

CPI in 1907CPI in 1906
×
1906 USD value
=
1907 USD value

Then plug in historical CPI values. The U.S. CPI was 9 in the year 1906 and 9.4 in 1907:

9.49
×
\$1
=
\$1.04

\$1 in 1906 has the same "purchasing power" or "buying power" as \$1.04 in 1907.

To get the total inflation rate for the 1 years between 1906 and 1907, we use the following formula:

CPI in 1907 - CPI in 1906CPI in 1906
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

9.4 - 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 1906, our investment would be nominally worth approximately \$0.76 in 1907. This is a return on investment of -23.73%, with an absolute return of \$-0.24.

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 4.26% of returns (\$-0.01) during this period. This means the inflation-adjusted real return of our \$1 investment is \$-0.23.

Investment in S&P 500 Index, 1906-1907
Original Amount Final Amount Change
Nominal \$1 \$0.76 -23.73%
Real
\$1 \$-0.23 -22.72%

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

• The British battleship HMS Dreadnought is launched. It is known for its revolutionary design.
• Roald Amundsen, a Norwegian explorer, discovers the ‘Magnetic South Pole’.
• Worldwide standard for help is established as 'SOS' by the International Radiotelegraph Conference in Berlin.
• The opium trade is banned by China.

### 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 1907 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 23 Oct. 2019, https://www.officialdata.org/inflation-rate-in-1907.