U.S. inflation rate in 1971: 4.38%

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Inflation in 1971 and Its Effect on Dollar Value

Purchasing power decreased by 4.38% in 1971 compared to the previous year, 1970. On average, you would have to spend 4.38% more money in 1971 than in 1970 for the same item.

In other words, $100 in 1970 is equivalent in purchasing power to $104.38 in 1971.

The 1970 inflation rate was 5.72%. The inflation rate in 1971 was 4.38%. The 1971 inflation rate is higher compared to the average inflation rate of 3.97% per year between 1971 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1971 was 40.5. It was 38.8 in the previous year, 1970. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 1970 to 1971
Average inflation rate 4.38%
Converted amount ($100 base) $104.38
Price difference ($100 base) $4.38
CPI in 1970 38.8
CPI in 1971 40.5
Inflation in 1970 5.72%
Inflation in 1971 4.38%


U.S. Inflation since 1913
Annual Rate, U.S. Bureau of Labor Statistics CPI

Inflation by City

Inflation can vary widely by city, even within the United States. Here's how some cities fared in 1970 to 1971 (figures shown are purchasing power equivalents of $100):

New York experienced the highest rate of inflation during the 1 years between 1970 and 1971 (5.79%).

Seattle, Washington experienced the lowest rate of inflation during the 1 years between 1970 and 1971 (2.19%).


Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £100.00 in 1970 would be equivalent to £109.44 in 1971, an absolute change of £9.44 and a cumulative change of 9.44%.

In Canada, CA$100.00 in 1970 would be equivalent to CA$104.93 in 1971, an absolute change of CA$4.93 and a cumulative change of 4.93%.

Compare these numbers to the US's overall absolute change of $4.38 and total percent change of 4.38%.


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 1970 and 1971.

Compare these values to the overall average of 4.38% per year:

Category Avg Inflation (%) Total Inflation (%) $100 in 1970 → 1971
Food 2.94 2.94 102.94
Shelter 4.18 4.18 104.18
Energy 3.99 3.99 103.99
Apparel 3.24 3.24 103.24
New vehicles 0.00 0.00 100.00
Used cars and trucks 0.00 0.00 100.00
Transportation services 0.00 0.00 100.00
Medical care services 7.28 7.28 107.28
Medical care commodities 1.74 1.74 101.74

It's important to note that not all categories may be tracked since 1970. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $100, 1970 to 1971

This inflation calculator uses the following inflation rate formula:

CPI in 1971CPI in 1970
×
1970 USD value
=
1971 USD value

Then plug in historical CPI values. The U.S. CPI was 38.8 in the year 1970 and 40.5 in 1971:

40.538.8
×
$100
=
$104.38

$100 in 1970 has the same "purchasing power" or "buying power" as $104.38 in 1971.

To get the total inflation rate for the 1 years between 1970 and 1971, we use the following formula:

CPI in 1971 - CPI in 1970CPI in 1970
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

40.5 - 38.838.8
×
100
=
4%

Alternate Measurements of Inflation

The above data describe the CPI for all items. Also of note is the Core CPI, which measures inflation for all items except for the more volatile categories of food and energy. Core inflation averaged 4.70% per year between 1970 and 1971 (vs all-CPI inflation of 4.38%), for an inflation total of 4.70%.

When using the core inflation measurement, $100 in 1970 is equivalent in buying power to $104.70 in 1971, a difference of $4.70. Recall that for All Items, the converted amount is $104.38 with a difference of $4.38.

In 1970, core inflation was 6.25%.


Comparison to S&P 500 Index

To help put this inflation into perspective, if you had invested $100 in the S&P 500 index in 1970, your investment would be worth approximately $122.60 in 1971. This is a change of 22.60%.

This means the nominal return on a $100 investment is $22.60, but inflation would eat into your real returns.

Inflation would account for 4.20% of your returns ($0.95), for an inflation-adjusted real return of about $21.65.


News headlines from 1970

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

  • 1/1/1970 established as Epoch time for UNIX systems.
  • Rhodesia declares independence and sets up a republican government.
  • Aswan Dam opens in Egypt to prevent flooding of the Nile River.
  • A Palestinian terrorist organization, hijacks three aircraft, in an incident that is later known as Black September.

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 1971 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 20 Oct. 2018, https://www.officialdata.org/inflation-rate-in-1971.

in2013dollars.com is a reference website maintained by the Official Data Foundation.


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