\$

# U.S. inflation rate in 2008: 3.84%

### Inflation in 2008 and Its Effect on Dollar Value

Purchasing power decreased by 3.84% in 2008 compared to 2007. On average, you would have to spend 3.84% more money in 2008 than in 2007 for the same item.

In other words, \$1 in 2007 is equivalent in purchasing power to about \$1.04 in 2008.

The 2007 inflation rate was 2.85%. The inflation rate in 2008 was 3.84%. The 2008 inflation rate is higher compared to the average inflation rate of 1.61% per year between 2008 and 2019.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 2008 was 215.30. It was 207.34 in the previous year, 2007. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.

 Average inflation rate 3.84% Converted amount (\$1 base) \$1.04 Price difference (\$1 base) \$0.04 CPI in 2007 207.342 CPI in 2008 215.303 Inflation in 2007 2.85% Inflation in 2008 3.84%

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 2007 to 2008 (figures shown are purchasing power equivalents of \$1):

Miami-Fort Lauderdale, Florida experienced the highest rate of inflation during the 1 years between 2007 and 2008 (4.81%).

Detroit, Michigan experienced the lowest rate of inflation during the 1 years between 2007 and 2008 (2.44%).

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 2007 would be equivalent to £1.04 in 2008, an absolute change of £0.04 and a cumulative change of 3.99%.

In Canada, CA\$1.00 in 2007 would be equivalent to CA\$1.01 in 2008, an absolute change of CA\$0.01 and a cumulative change of 1.16%.

Compare these numbers to the US's overall absolute change of \$0.04 and total percent change of 3.84%.

### 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 2007 and 2008.

Compare these values to the overall average of 3.84% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 2007 → 2008
Food 5.51 5.51 1.06
Shelter 2.52 2.52 1.03
Energy 13.68 13.68 1.14
Apparel -0.08 -0.08 1.00
New vehicles -1.51 -1.51 0.98
Used cars and trucks -1.32 -1.32 0.99
Transportation services 4.43 4.43 1.04
Medical care services 4.24 4.24 1.04
Medical care commodities 2.09 2.09 1.02

It's important to note that not all categories may be tracked since 2007. This table and visualization use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 2007 to 2008

This inflation calculator uses the following inflation rate formula:

CPI in 2008CPI in 2007
×
2007 USD value
=
2008 USD value

Then plug in historical CPI values. The U.S. CPI was 207.342 in the year 2007 and 215.303 in 2008:

215.303207.342
×
\$1
=
\$1.04

\$1 in 2007 has the same "purchasing power" or "buying power" as \$1.04 in 2008.

To get the total inflation rate for the 1 years between 2007 and 2008, we use the following formula:

CPI in 2008 - CPI in 2007CPI in 2007
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

215.303 - 207.342207.342
×
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 2.30% per year between 2007 and 2008 (vs all-CPI inflation of 3.84%), for an inflation total of 2.30%.

When using the core inflation measurement, \$1 in 2007 is equivalent in buying power to \$1.02 in 2008, a difference of \$0.02. Recall that for All Items, the converted amount is \$1.04 with a difference of \$0.04.

In 2007, core inflation was 2.34%.

Chained CPI is an alternative measurement that takes into account how consumers adjust spending for similar items. Chained inflation averaged 3.73% per year between 2007 and 2008, a total inflation amount of 2.30%.

According to the Chained CPI measurement, \$1 in 2007 is equal in buying power to \$1.04 in 2008, a difference of \$0.04 (versus a converted amount of \$1.04/change of \$0.04 for All Items).

In 2007, chained inflation was 2.53%.

### 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 2007, our investment would be nominally worth approximately \$0.63 in 2008. This is a return on investment of -36.56%, with an absolute return of \$-0.37.

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 3.70% 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, 2007-2008
Original Amount Final Amount Change
Nominal \$1 \$0.63 -36.56%
Real
\$1 \$-0.35 -35.20%

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

• The British Army withdraws from Northern Ireland, marking the end of, operation Banner - the longest operation in British military history.
• The South Korean President enters North Korea, crossing the Military Demarcation Line, to the second Inter-Korean Summit with the leader of North Korea.
• Bulgaria and Romania join the European Union. Aside from Irish, languages of the two countries become official EU languages, amongst 20 others.
• Slovenia becomes the 13th Eurozone country, after adopting the Euro currency.

### 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 2008 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 24 Oct. 2019, https://www.officialdata.org/inflation-rate-in-2008.