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# U.S. inflation rate in 1985: 3.56%

### Inflation in 1985 and Its Effect on Dollar Value

Purchasing power decreased by 3.56% in 1985 compared to 1984. On average, you would have to spend 3.56% more money in 1985 than in 1984 for the same item.

In other words, \$1 in 1984 is equivalent in purchasing power to about \$1.04 in 1985.

The 1984 inflation rate was 4.32%. The inflation rate in 1985 was 3.56%. The 1985 inflation rate is higher compared to the average inflation rate of 2.59% per year between 1985 and 2019.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1985 was 107.60. It was 103.90 in the previous year, 1984. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.

 Average inflation rate 3.56% Converted amount (\$1 base) \$1.04 Price difference (\$1 base) \$0.04 CPI in 1984 103.900 CPI in 1985 107.600 Inflation in 1984 4.32% Inflation in 1985 3.56%

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 1984 to 1985 (figures shown are purchasing power equivalents of \$1):

Philadelphia, Pennsylvania experienced the highest rate of inflation during the 1 years between 1984 and 1985 (4.54%).

Houston, Texas experienced the lowest rate of inflation during the 1 years between 1984 and 1985 (2.24%).

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 1984 would be equivalent to £1.06 in 1985, an absolute change of £0.06 and a cumulative change of 6.08%.

In Canada, CA\$1.00 in 1984 would be equivalent to CA\$1.04 in 1985, an absolute change of CA\$0.04 and a cumulative change of 4.40%.

Compare these numbers to the US's overall absolute change of \$0.04 and total percent change of 3.56%.

### 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 1984 and 1985.

Compare these values to the overall average of 3.56% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1984 → 1985
Food 2.27 2.27 1.02
Shelter 5.60 5.60 1.06
Energy 0.69 0.69 1.01
Apparel 2.92 2.92 1.03
New vehicles 3.35 3.35 1.03
Used cars and trucks 1.07 1.07 1.01
Transportation services 4.96 4.96 1.05
Medical care services 6.04 6.04 1.06
Medical care commodities 7.11 7.11 1.07

It's important to note that not all categories may be tracked since 1984. This table and visualization use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1984 to 1985

This inflation calculator uses the following inflation rate formula:

CPI in 1985CPI in 1984
×
1984 USD value
=
1985 USD value

Then plug in historical CPI values. The U.S. CPI was 103.9 in the year 1984 and 107.6 in 1985:

107.6103.9
×
\$1
=
\$1.04

\$1 in 1984 has the same "purchasing power" or "buying power" as \$1.04 in 1985.

To get the total inflation rate for the 1 years between 1984 and 1985, we use the following formula:

CPI in 1985 - CPI in 1984CPI in 1984
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

107.6 - 103.9103.9
×
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 4.37% per year between 1984 and 1985 (vs all-CPI inflation of 3.56%), for an inflation total of 4.37%.

When using the core inflation measurement, \$1 in 1984 is equivalent in buying power to \$1.04 in 1985, a difference of \$0.04. Recall that for All Items, the converted amount is \$1.04 with a difference of \$0.04.

In 1984, core inflation was 4.95%.

### 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 1984, our investment would be nominally worth approximately \$1.36 in 1985. This is a return on investment of 36.39%, with an absolute return of \$0.36.

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 3.44% of returns (\$0.01) during this period. This means the inflation-adjusted real return of our \$1 investment is \$0.35.

Investment in S&P 500 Index, 1984-1985
Original Amount Final Amount Change
Nominal \$1 \$1.36 36.39%
Real
\$1 \$0.35 35.14%

### News headlines from 1984

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

• Apple Computer Inc unveils the Macintosh personal computer.
• Virus causing AIDS (acquired immune deficiency syndrome) is identified as HTLV-III.
• Operation Blue Star took place as Indira Gandhi issued command to attack the Golden Temple, holiest site of Sikh's.
• Indira Gandhi orders an attack on the Golden temple, one of the holiest sites in Sikh tradition, in an operation now called Blue Star.
• A toxic leak in the Union Carbide factory kills 2,259 people, a further 500,000 are injured.

### 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 1985 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 24 Oct. 2019, https://www.officialdata.org/inflation-rate-in-1985.

Special thanks to QuickChart for providing downloadable chart images.

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

 Average inflation rate 3.56% Converted amount (\$1 base) \$1.04 Price difference (\$1 base) \$0.04 CPI in 1984 103.900 CPI in 1985 107.600 Inflation in 1984 4.32% Inflation in 1985 3.56%