U.S. inflation rate in 2005: 3.39%

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Inflation in 2005 and Its Effect on Dollar Value

Purchasing power decreased by 3.39% in 2005 compared to the previous year, 2004. On average, you would have to spend 3.39% more money in 2005 than in 2004 for the same item.

In other words, $1 in 2004 is equivalent in purchasing power to $1.03 in 2005.

The 2004 inflation rate was 2.66%. The inflation rate in 2005 was 3.39%. The 2005 inflation rate is higher compared to the average inflation rate of 2.01% per year between 2005 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 2005 was 195.3. It was 188.9 in the previous year, 2004. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 2004 to 2005
Average inflation rate 3.39%
Converted amount ($1 base) $1.03
Price difference ($1 base) $0.03
CPI in 2004 188.900
CPI in 2005 195.300
Inflation in 2004 2.66%
Inflation in 2005 3.39%


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 2004 to 2005 (figures shown are purchasing power equivalents of $1):

Miami-Fort Lauderdale, Florida experienced the highest rate of inflation during the 1 years between 2004 and 2005 (4.70%).

San Francisco, California experienced the lowest rate of inflation during the 1 years between 2004 and 2005 (1.97%).

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 2004 would be equivalent to £1.03 in 2005, an absolute change of £0.03 and a cumulative change of 2.82%.

In Canada, CA$1.00 in 2004 would be equivalent to CA$1.02 in 2005, an absolute change of CA$0.02 and a cumulative change of 2.09%.

Compare these numbers to the US's overall absolute change of $0.03 and total percent change of 3.39%.


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 2004 and 2005.

Compare these values to the overall average of 3.39% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 2004 → 2005
Food 2.44 2.44 1.02
Shelter 2.55 2.55 1.03
Energy 16.93 16.93 1.17
Apparel -0.74 -0.74 0.99
New vehicles 0.63 0.63 1.01
Used cars and trucks 4.60 4.60 1.05
Transportation services 2.31 2.31 1.02
Medical care services 4.78 4.78 1.05
Medical care commodities 2.50 2.50 1.03

It's important to note that not all categories may be tracked since 2004. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 2004 to 2005

This inflation calculator uses the following inflation rate formula:

CPI in 2005CPI in 2004
×
2004 USD value
=
2005 USD value

Then plug in historical CPI values. The U.S. CPI was 188.9 in the year 2004 and 195.3 in 2005:

195.3188.9
×
$1
=
$1.03

$1 in 2004 has the same "purchasing power" or "buying power" as $1.03 in 2005.

To get the total inflation rate for the 1 years between 2004 and 2005, we use the following formula:

CPI in 2005 - CPI in 2004CPI in 2004
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

195.3 - 188.9188.9
×
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 2.15% per year between 2004 and 2005 (vs all-CPI inflation of 3.39%), for an inflation total of 2.15%.

When using the core inflation measurement, $1 in 2004 is equivalent in buying power to $1.02 in 2005, a difference of $0.02. Recall that for All Items, the converted amount is $1.03 with a difference of $0.03.

In 2004, core inflation was 1.77%.

Chained CPI is an alternative measurement that takes into account how consumers adjust spending for similar items. Chained inflation averaged 2.92% per year between 2004 and 2005, a total inflation amount of 2.15%.

According to the Chained CPI measurement, $1 in 2004 is equal in buying power to $1.03 in 2005, a difference of $0.03 (versus a converted amount of $1.03/change of $0.03 for All Items).

In 2004, chained inflation was 2.51%.


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 2004, our investment would be nominally worth approximately $1.17 in 2005. This is a return on investment of 16.78%, 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 3.28% of returns ($0.01) during this period. This means the inflation-adjusted real return of our $1 investment is $0.16.

Investment in S&P 500 Index, 2004-2005
Original Amount Final Amount Change
Nominal $1 $1.17 16.78%
Real
Inflation Adjusted
$1 $0.16 16.23%


News headlines from 2004

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

  • The Humanitarian Ceasefire Agreement is signed by the Sudanese government and two rebel groups.
  • Massachusetts becomes the first United States state to legalize same-sex marriage.
  • The Indonesian elections are won by Susilo Bambang Yudhoyono.

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 2005 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 14 Nov. 2018, https://www.officialdata.org/inflation-rate-in-2005.

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


» Read more about inflation and investment.