U.S. inflation rate in 1972: 3.21%

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Inflation in 1972 and Its Effect on Dollar Value

Purchasing power decreased by 3.21% in 1972 compared to the previous year, 1971. On average, you would have to spend 3.21% more money in 1972 than in 1971 for the same item.

In other words, $1 in 1971 is equivalent in purchasing power to $1.03 in 1972.

The 1971 inflation rate was 4.38%. The inflation rate in 1972 was 3.21%. The 1972 inflation rate is lower compared to the average inflation rate of 3.99% per year between 1972 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1972 was 41.8. It was 40.5 in the previous year, 1971. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 1971 to 1972
Average inflation rate 3.21%
Converted amount ($1 base) $1.03
Price difference ($1 base) $0.03
CPI in 1971 40.500
CPI in 1972 41.800
Inflation in 1971 4.38%
Inflation in 1972 3.21%


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 1971 to 1972 (figures shown are purchasing power equivalents of $1):

New York experienced the highest rate of inflation during the 1 years between 1971 and 1972 (4.40%).

Philadelphia, Pennsylvania experienced the lowest rate of inflation during the 1 years between 1971 and 1972 (2.77%).

Note that some locations showing 0% inflation may have not yet reported latest data.


Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1971 would be equivalent to £1.07 in 1972, an absolute change of £0.07 and a cumulative change of 7.13%.

In Canada, CA$1.00 in 1971 would be equivalent to CA$1.05 in 1972, an absolute change of CA$0.05 and a cumulative change of 5.16%.

Compare these numbers to the US's overall absolute change of $0.03 and total percent change of 3.21%.


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 1971 and 1972.

Compare these values to the overall average of 3.21% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 1971 → 1972
Food 4.31 4.31 1.04
Shelter 4.47 4.47 1.04
Energy 2.77 2.77 1.03
Apparel 2.06 2.06 1.02
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 3.64 3.64 1.04
Medical care commodities 0.25 0.25 1.00

It's important to note that not all categories may be tracked since 1971. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 1971 to 1972

This inflation calculator uses the following inflation rate formula:

CPI in 1972CPI in 1971
×
1971 USD value
=
1972 USD value

Then plug in historical CPI values. The U.S. CPI was 40.5 in the year 1971 and 41.8 in 1972:

41.840.5
×
$1
=
$1.03

$1 in 1971 has the same "purchasing power" or "buying power" as $1.03 in 1972.

To get the total inflation rate for the 1 years between 1971 and 1972, we use the following formula:

CPI in 1972 - CPI in 1971CPI in 1971
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

41.8 - 40.540.5
×
100
=
3%

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 3.06% per year between 1971 and 1972 (vs all-CPI inflation of 3.21%), for an inflation total of 3.06%.

When using the core inflation measurement, $1 in 1971 is equivalent in buying power to $1.03 in 1972, a difference of $0.03. Recall that for All Items, the converted amount is $1.03 with a difference of $0.03.

In 1971, core inflation was 4.70%.


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 1971, our investment would be nominally worth approximately $1.34 in 1972. This is a return on investment of 34.37%, with an absolute return of $0.34.

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 3.11% of returns ($0.01) during this period. This means the inflation-adjusted real return of our $1 investment is $0.33.

Investment in S&P 500 Index, 1971-1972
Original Amount Final Amount Change
Nominal $1 $1.34 34.37%
Real
Inflation Adjusted
$1 $0.33 33.30%


News headlines from 1971

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

  • Idi Amin declares himself president of Uganda.
  • The Nasdaq Composite stock market index debuts with fifty companies and a starting value of 100.
  • Indian troops, aided by Bengali guerrillas under Mukti Bahini, are victorious over the Pakistan army, in the battle of Garibpur.

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 1972 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 15 Nov. 2018, https://www.officialdata.org/inflation-rate-in-1972.

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


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