U.S. inflation rate in 2006: 3.23%

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Inflation in 2006 and Its Effect on Dollar Value

Purchasing power decreased by 3.23% in 2006 compared to the previous year, 2005. On average, you would have to spend 3.23% more money in 2006 than in 2005 for the same item.

In other words, $1 in 2005 is equivalent in purchasing power to $1.03 in 2006.

The 2005 inflation rate was 3.39%. The inflation rate in 2006 was 3.23%. The 2006 inflation rate is higher compared to the average inflation rate of 1.91% per year between 2006 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 2006 was 201.6. It was 195.3 in the previous year, 2005. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 2005 to 2006
Average inflation rate 3.23%
Converted amount ($1 base) $1.03
Price difference ($1 base) $0.03
CPI in 2005 195.300
CPI in 2006 201.600
Inflation in 2005 3.39%
Inflation in 2006 3.23%


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 2005 to 2006 (figures shown are purchasing power equivalents of $1):

Miami-Fort Lauderdale, Florida experienced the highest rate of inflation during the 1 years between 2005 and 2006 (4.97%).

Minneapolis-St Paul, Minnesota experienced the lowest rate of inflation during the 1 years between 2005 and 2006 (1.61%).

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 2005 would be equivalent to £1.03 in 2006, an absolute change of £0.03 and a cumulative change of 3.20%.

In Canada, CA$1.00 in 2005 would be equivalent to CA$1.02 in 2006, an absolute change of CA$0.02 and a cumulative change of 1.67%.

Compare these numbers to the US's overall absolute change of $0.03 and total percent change of 3.23%.


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 2005 and 2006.

Compare these values to the overall average of 3.23% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 2005 → 2006
Food 2.34 2.34 1.02
Shelter 3.43 3.43 1.03
Energy 11.03 11.03 1.11
Apparel -0.07 -0.07 1.00
New vehicles -0.24 -0.24 1.00
Used cars and trucks 0.41 0.41 1.00
Transportation services 2.26 2.26 1.02
Medical care services 4.14 4.14 1.04
Medical care commodities 3.58 3.58 1.04

It's important to note that not all categories may be tracked since 2005. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 2005 to 2006

This inflation calculator uses the following inflation rate formula:

CPI in 2006CPI in 2005
×
2005 USD value
=
2006 USD value

Then plug in historical CPI values. The U.S. CPI was 195.3 in the year 2005 and 201.6 in 2006:

201.6195.3
×
$1
=
$1.03

$1 in 2005 has the same "purchasing power" or "buying power" as $1.03 in 2006.

To get the total inflation rate for the 1 years between 2005 and 2006, we use the following formula:

CPI in 2006 - CPI in 2005CPI in 2005
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

201.6 - 195.3195.3
×
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 2.51% per year between 2005 and 2006 (vs all-CPI inflation of 3.23%), for an inflation total of 2.51%.

When using the core inflation measurement, $1 in 2005 is equivalent in buying power to $1.03 in 2006, a difference of $0.03. Recall that for All Items, the converted amount is $1.03 with a difference of $0.03.

In 2005, core inflation was 2.15%.

Chained CPI is an alternative measurement that takes into account how consumers adjust spending for similar items. Chained inflation averaged 2.90% per year between 2005 and 2006, a total inflation amount of 2.51%.

According to the Chained CPI measurement, $1 in 2005 is equal in buying power to $1.03 in 2006, a difference of $0.03 (versus a converted amount of $1.03/change of $0.03 for All Items).

In 2005, chained inflation was 2.92%.


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 2005, our investment would be nominally worth approximately $1.25 in 2006. This is a return on investment of 24.85%, with an absolute return of $0.25.

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 3.12% of returns ($0.01) during this period. This means the inflation-adjusted real return of our $1 investment is $0.24.

Investment in S&P 500 Index, 2005-2006
Original Amount Final Amount Change
Nominal $1 $1.25 24.85%
Real
Inflation Adjusted
$1 $0.24 24.07%


News headlines from 2005

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

  • Egyptian President Hosni Mubarak asks Parliament to amend Article 76 and orders constitutional changes in order to allow multi-candidate presidential elections.
  • Syria's 29-year-long military domination of Lebanon ends, after it withdraws the last of its 14,000 troops under international pressure.
  • A coordinated bomb attack hits London's public transport system, during the morning rush hour, killing 52 and injuring a further 700 people.
  • Angela Merkel becomes first female Chancellor of Germany.

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 2006 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 14 Nov. 2018, https://www.officialdata.org/inflation-rate-in-2006.

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


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