U.S. inflation rate in 2016: 1.26%

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Inflation in 2016 and Its Effect on Dollar Value

Purchasing power decreased by 1.26% in 2016 compared to the previous year, 2015. On average, you would have to spend 1.26% more money in 2016 than in 2015 for the same item.

In other words, $1 in 2015 is equivalent in purchasing power to $1.01 in 2016.

The 2015 inflation rate was 0.12%. The inflation rate in 2016 was 1.26%. The 2016 inflation rate is lower compared to the average inflation rate of 2.65% per year between 2016 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 2016 was 240.007. It was 237.017 in the previous year, 2015. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 2015 to 2016
Average inflation rate 1.26%
Converted amount ($1 base) $1.01
Price difference ($1 base) $0.01
CPI in 2015 237.017
CPI in 2016 240.007
Inflation in 2015 0.12%
Inflation in 2016 1.26%


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 2015 to 2016 (figures shown are purchasing power equivalents of $1):

San Diego, California experienced the highest rate of inflation during the 1 years between 2015 and 2016 (4.00%).

Philadelphia, Pennsylvania experienced the lowest rate of inflation during the 1 years between 2015 and 2016 (0.59%).

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 2015 would be equivalent to £1.02 in 2016, an absolute change of £0.02 and a cumulative change of 1.70%.

In Canada, CA$1.00 in 2015 would be equivalent to CA$1.02 in 2016, an absolute change of CA$0.02 and a cumulative change of 1.50%.

Compare these numbers to the US's overall absolute change of $0.01 and total percent change of 1.26%.


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 2015 and 2016.

Compare these values to the overall average of 1.26% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 2015 → 2016
Food 0.28 0.28 1.00
Shelter 3.38 3.38 1.03
Energy -6.46 -6.46 0.94
Apparel 0.11 0.11 1.00
New vehicles 0.15 0.15 1.00
Used cars and trucks -2.47 -2.47 0.98
Transportation services 2.89 2.89 1.03
Medical care services 3.91 3.91 1.04
Medical care commodities 3.43 3.43 1.03

It's important to note that not all categories may be tracked since 2015. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 2015 to 2016

This inflation calculator uses the following inflation rate formula:

CPI in 2016CPI in 2015
×
2015 USD value
=
2016 USD value

Then plug in historical CPI values. The U.S. CPI was 237.017 in the year 2015 and 240.007 in 2016:

240.007237.017
×
$1
=
$1.01

$1 in 2015 has the same "purchasing power" or "buying power" as $1.01 in 2016.

To get the total inflation rate for the 1 years between 2015 and 2016, we use the following formula:

CPI in 2016 - CPI in 2015CPI in 2015
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

240.007 - 237.017237.017
×
100
=
1%

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 2.21% per year between 2015 and 2016 (vs all-CPI inflation of 1.26%), for an inflation total of 2.21%.

When using the core inflation measurement, $1 in 2015 is equivalent in buying power to $1.02 in 2016, a difference of $0.02. Recall that for All Items, the converted amount is $1.01 with a difference of $0.01.

In 2015, core inflation was 1.83%.

Chained CPI is an alternative measurement that takes into account how consumers adjust spending for similar items. Chained inflation averaged 0.93% per year between 2015 and 2016, a total inflation amount of 2.21%.

According to the Chained CPI measurement, $1 in 2015 is equal in buying power to $1.01 in 2016, a difference of $0.01 (versus a converted amount of $1.01/change of $0.01 for All Items).

In 2015, chained inflation was -0.12%.


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 2015, our investment would be nominally worth approximately $1.17 in 2016. This is a return on investment of 16.92%, 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 1.25% of returns ($0.00) during this period. This means the inflation-adjusted real return of our $1 investment is $0.17.

Investment in S&P 500 Index, 2015-2016
Original Amount Final Amount Change
Nominal $1 $1.17 16.92%
Real
Inflation Adjusted
$1 $0.17 16.71%


News headlines from 2015

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

  • Barack Obama and Raul Castro, hold the first meeting between Cuban and American leaders since the Cuban Revolution.
  • The population of India reaches 1 billion (officially). The billionth baby was named Astha Arora.
  • Donald Trump announces his intention to join the US presidential campaign.
  • China brings an end to its one child policy, 35 years after it was first introduced.

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 2016 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 9 Dec. 2018, https://www.officialdata.org/inflation-rate-in-2016.

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


» Read more about inflation and investment.