U.S. inflation rate in 1990: 5.40%

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Inflation in 1990 and Its Effect on Dollar Value

Purchasing power decreased by 5.40% in 1990 compared to the previous year, 1989. On average, you would have to spend 5.40% more money in 1990 than in 1989 for the same item.

In other words, $1 in 1989 is equivalent in purchasing power to $1.05 in 1990.

The 1989 inflation rate was 4.82%. The inflation rate in 1990 was 5.40%. The 1990 inflation rate is higher compared to the average inflation rate of 2.39% per year between 1990 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1990 was 130.7. It was 124 in the previous year, 1989. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 1989 to 1990
Average inflation rate 5.40%
Converted amount ($1 base) $1.05
Price difference ($1 base) $0.05
CPI in 1989 124.000
CPI in 1990 130.700
Inflation in 1989 4.82%
Inflation in 1990 5.40%


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 1989 to 1990 (figures shown are purchasing power equivalents of $1):

New York experienced the highest rate of inflation during the 1 years between 1989 and 1990 (6.11%).

Atlanta, Georgia experienced the lowest rate of inflation during the 1 years between 1989 and 1990 (0.00%).

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 1989 would be equivalent to £1.09 in 1990, an absolute change of £0.09 and a cumulative change of 9.46%.

In Canada, CA$1.00 in 1989 would be equivalent to CA$1.05 in 1990, an absolute change of CA$0.05 and a cumulative change of 4.99%.

Compare these numbers to the US's overall absolute change of $0.05 and total percent change of 5.40%.


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 1989 and 1990.

Compare these values to the overall average of 5.40% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 1989 → 1990
Food 5.83 5.83 1.06
Shelter 5.39 5.39 1.05
Energy 8.19 8.19 1.08
Apparel 4.64 4.64 1.05
New vehicles 1.85 1.85 1.02
Used cars and trucks -2.35 -2.35 0.98
Transportation services 6.32 6.32 1.06
Medical care services 9.26 9.26 1.09
Medical care commodities 8.36 8.36 1.08

It's important to note that not all categories may be tracked since 1989. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 1989 to 1990

This inflation calculator uses the following inflation rate formula:

CPI in 1990CPI in 1989
×
1989 USD value
=
1990 USD value

Then plug in historical CPI values. The U.S. CPI was 124 in the year 1989 and 130.7 in 1990:

130.7124
×
$1
=
$1.05

$1 in 1989 has the same "purchasing power" or "buying power" as $1.05 in 1990.

To get the total inflation rate for the 1 years between 1989 and 1990, we use the following formula:

CPI in 1990 - CPI in 1989CPI in 1989
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

130.7 - 124124
×
100
=
5%

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 5.03% per year between 1989 and 1990 (vs all-CPI inflation of 5.40%), for an inflation total of 5.03%.

When using the core inflation measurement, $1 in 1989 is equivalent in buying power to $1.05 in 1990, a difference of $0.05. Recall that for All Items, the converted amount is $1.05 with a difference of $0.05.

In 1989, core inflation was 4.49%.


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 1989, our investment would be nominally worth approximately $1.22 in 1990. This is a return on investment of 21.92%, with an absolute return of $0.22.

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 5.13% of returns ($0.01) during this period. This means the inflation-adjusted real return of our $1 investment is $0.21.

Investment in S&P 500 Index, 1989-1990
Original Amount Final Amount Change
Nominal $1 $1.22 21.92%
Real
Inflation Adjusted
$1 $0.21 20.80%


News headlines from 1989

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

  • Chinese troops kill an estimated 1,000 students protesting at Tiananmen Square.
  • The first (partially) free elections take place in Poland, bringing democracy to Eastern Europe for the first time in 40 years. (Won by the Solidarity Party)
  • The demolition of the Berlin Wall begins.
  • Presidents George H. W. Bush and Mikhail Gorbachev, declare that the Cold War has ended.

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 1990 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 14 Nov. 2018, https://www.officialdata.org/inflation-rate-in-1990.

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


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