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# U.S. inflation rate in 1981: 10.32%

### Inflation in 1981 and Its Effect on Dollar Value

Purchasing power decreased by 10.32% in 1981 compared to 1980. On average, you would have to spend 10.32% more money in 1981 than in 1980 for the same item.

In other words, \$1 in 1980 is equivalent in purchasing power to about \$1.10 in 1981.

The 1980 inflation rate was 13.50%. The inflation rate in 1981 was 10.32%. The 1981 inflation rate is higher compared to the average inflation rate of 2.77% per year between 1981 and 2019.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1981 was 90.90. It was 82.40 in the previous year, 1980. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.

 Average inflation rate 10.32% Converted amount (\$1 base) \$1.10 Price difference (\$1 base) \$0.10 CPI in 1980 82.400 CPI in 1981 90.900 Inflation in 1980 13.50% Inflation in 1981 10.32%

USD 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 1980 to 1981 (figures shown are purchasing power equivalents of \$1):

San Francisco, California experienced the highest rate of inflation during the 1 years between 1980 and 1981 (12.60%).

Detroit, Michigan experienced the lowest rate of inflation during the 1 years between 1980 and 1981 (9.28%).

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 1980 would be equivalent to £1.12 in 1981, an absolute change of £0.12 and a cumulative change of 11.87%.

In Canada, CA\$1.00 in 1980 would be equivalent to CA\$1.12 in 1981, an absolute change of CA\$0.12 and a cumulative change of 12.12%.

Compare these numbers to the US's overall absolute change of \$0.10 and total percent change of 10.32%.

### 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 1980 and 1981.

Compare these values to the overall average of 10.32% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1980 → 1981
Food 7.82 7.82 1.08
Shelter 11.72 11.72 1.12
Energy 13.53 13.53 1.14
Apparel 4.77 4.77 1.05
New vehicles 0.00 0.00 1.00
Used cars and trucks 0.00 0.00 1.00
Transportation services 11.93 11.93 1.12
Medical care services 10.72 10.72 1.11
Medical care commodities 10.92 10.92 1.11

It's important to note that not all categories may be tracked since 1980. This table and visualization use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1980 to 1981

This inflation calculator uses the following inflation rate formula:

CPI in 1981CPI in 1980
×
1980 USD value
=
1981 USD value

Then plug in historical CPI values. The U.S. CPI was 82.4 in the year 1980 and 90.9 in 1981:

90.982.4
×
\$1
=
\$1.10

\$1 in 1980 has the same "purchasing power" or "buying power" as \$1.10 in 1981.

To get the total inflation rate for the 1 years between 1980 and 1981, we use the following formula:

CPI in 1981 - CPI in 1980CPI in 1980
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

90.9 - 82.482.4
×
100
=
10%

### 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 10.46% per year between 1980 and 1981 (vs all-CPI inflation of 10.32%), for an inflation total of 10.46%.

When using the core inflation measurement, \$1 in 1980 is equivalent in buying power to \$1.10 in 1981, a difference of \$0.10. Recall that for All Items, the converted amount is \$1.10 with a difference of \$0.10.

In 1980, core inflation was 12.42%.

### 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 1980, our investment would be nominally worth approximately \$1.17 in 1981. This is a return on investment of 16.92%, with an absolute return of \$0.17.

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 9.35% of returns (\$0.02) during this period. This means the inflation-adjusted real return of our \$1 investment is \$0.15.

Investment in S&P 500 Index, 1980-1981
Original Amount Final Amount Change
Nominal \$1 \$1.17 16.92%
Real
\$1 \$0.15 15.34%

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

• Princess Victoria is crowned Princess of Sweden.
• Iranian protesters storm the Russian embassy in Iran.
• Abdou Diouf is elected president of Senegal after being Prime Minister for ten years.
• Cable News Network (CNN) is transmitted for the first time.
• Saddam Hussein, President of Iraq, declares a holy war on Iran.

### 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 1981 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 24 Oct. 2019, https://www.officialdata.org/inflation-rate-in-1981.