U.S. inflation rate in 2007: 2.85%

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Inflation in 2007 and Its Effect on Dollar Value

Purchasing power decreased by 2.85% in 2007 compared to the previous year, 2006. On average, you would have to spend 2.85% more money in 2007 than in 2006 for the same item.

In other words, $1 in 2006 is equivalent in purchasing power to $1.03 in 2007.

The 2006 inflation rate was 3.23%. The inflation rate in 2007 was 2.85%. The 2007 inflation rate is higher compared to the average inflation rate of 1.82% per year between 2007 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 2007 was 207.342. It was 201.6 in the previous year, 2006. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 2006 to 2007
Average inflation rate 2.85%
Converted amount ($1 base) $1.03
Price difference ($1 base) $0.03
CPI in 2006 201.600
CPI in 2007 207.342
Inflation in 2006 3.23%
Inflation in 2007 2.85%


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 2006 to 2007 (figures shown are purchasing power equivalents of $1):

Tampa, Florida experienced the highest rate of inflation during the 1 years between 2006 and 2007 (5.19%).

Dallas-Fort Worth, Texas experienced the lowest rate of inflation during the 1 years between 2006 and 2007 (1.50%).

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 2006 would be equivalent to £1.04 in 2007, an absolute change of £0.04 and a cumulative change of 4.29%.

In Canada, CA$1.00 in 2006 would be equivalent to CA$1.02 in 2007, an absolute change of CA$0.02 and a cumulative change of 2.38%.

Compare these numbers to the US's overall absolute change of $0.03 and total percent change of 2.85%.


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 2006 and 2007.

Compare these values to the overall average of 2.85% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 2006 → 2007
Food 3.97 3.97 1.04
Shelter 3.65 3.65 1.04
Energy 5.66 5.66 1.06
Apparel -0.38 -0.38 1.00
New vehicles -0.98 -0.98 0.99
Used cars and trucks -3.04 -3.04 0.97
Transportation services 1.28 1.28 1.01
Medical care services 5.33 5.33 1.05
Medical care commodities 1.44 1.44 1.01

It's important to note that not all categories may be tracked since 2006. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 2006 to 2007

This inflation calculator uses the following inflation rate formula:

CPI in 2007CPI in 2006
×
2006 USD value
=
2007 USD value

Then plug in historical CPI values. The U.S. CPI was 201.6 in the year 2006 and 207.342 in 2007:

207.342201.6
×
$1
=
$1.03

$1 in 2006 has the same "purchasing power" or "buying power" as $1.03 in 2007.

To get the total inflation rate for the 1 years between 2006 and 2007, we use the following formula:

CPI in 2007 - CPI in 2006CPI in 2006
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

207.342 - 201.6201.6
×
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 2.34% per year between 2006 and 2007 (vs all-CPI inflation of 2.85%), for an inflation total of 2.34%.

When using the core inflation measurement, $1 in 2006 is equivalent in buying power to $1.02 in 2007, a difference of $0.02. Recall that for All Items, the converted amount is $1.03 with a difference of $0.03.

In 2006, core inflation was 2.51%.

Chained CPI is an alternative measurement that takes into account how consumers adjust spending for similar items. Chained inflation averaged 2.53% per year between 2006 and 2007, a total inflation amount of 2.34%.

According to the Chained CPI measurement, $1 in 2006 is equal in buying power to $1.03 in 2007, a difference of $0.03 (versus a converted amount of $1.03/change of $0.03 for All Items).

In 2006, chained inflation was 2.90%.


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 2006, our investment would be nominally worth approximately $1.12 in 2007. This is a return on investment of 11.74%, with an absolute return of $0.12.

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 2.77% of returns ($0.00) during this period. This means the inflation-adjusted real return of our $1 investment is $0.11.

Investment in S&P 500 Index, 2006-2007
Original Amount Final Amount Change
Nominal $1 $1.12 11.74%
Real
Inflation Adjusted
$1 $0.11 11.42%


News headlines from 2006

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

  • Nepali security forces injure 243 pro-democracy protesters.
  • North Kora is alleged to have tested its first nuclear device.

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 2007 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 14 Nov. 2018, https://www.officialdata.org/inflation-rate-in-2007.

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


» Read more about inflation and investment.