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# U.S. inflation rate in 1789: -1.12%

### Inflation in 1789 and Its Effect on Dollar Value

Purchasing power increased by 1.12% in 1789 compared to 1788. On average, you would have to spend 1.12% less money in 1789 than in 1788 for the same item. This is an example of deflation.

In other words, \$1 in 1788 is equivalent in purchasing power to about \$0.99 in 1789.

The 1788 inflation rate was -4.30%. The inflation rate in 1789 was -1.12%. The 1789 inflation rate is lower compared to the average inflation rate of 1.47% per year between 1789 and 2020.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1789 was 8.80. It was 8.90 in the previous year, 1788. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation. Because the 1789 CPI is less than 1788 CPI, negative inflation (also known as deflation) has occurred.

 Average inflation rate -1.12% Converted amount (\$1 base) \$0.99 Price difference (\$1 base) \$-0.01 CPI in 1788 8.900 CPI in 1789 8.800 Inflation in 1788 -4.30% Inflation in 1789 -1.12%

USD Inflation since 1635
Annual Rate, the Bureau of Labor Statistics CPI

### Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1788 would be equivalent to £0.99 in 1789, an absolute change of £-0.01 and a cumulative change of -1.33%.

Compare these numbers to the US's overall absolute change of \$-0.01 and total percent change of -1.12%.

### 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 1788 and 1789.

Compare these values to the overall average of -1.12% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1788 → 1789
Food and beverages 0.00 0.00 1.00
Housing 0.00 0.00 1.00
Apparel 0.00 0.00 1.00
Transportation 0.00 0.00 1.00
Medical care 0.00 0.00 1.00
Recreation 0.00 0.00 1.00
Education and communication 0.00 0.00 1.00
Other goods and services 0.00 0.00 1.00

For all these visualizations, it's important to note that not all categories may have been tracked since 1788. This table and charts use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1788 to 1789

This inflation calculator uses the following inflation rate formula:

CPI in 1789CPI in 1788
×
1788 USD value
=
1789 USD value

Then plug in historical CPI values. The U.S. CPI was 8.9 in the year 1788 and 8.8 in 1789:

8.88.9
×
\$1
=
\$0.99

\$1 in 1788 has the same "purchasing power" or "buying power" as \$0.99 in 1789.

To get the total inflation rate for the 1 years between 1788 and 1789, we use the following formula:

CPI in 1789 - CPI in 1788CPI in 1788
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

8.8 - 8.98.9
×
100
=
-1%

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

• The first ships of convicts sailing from England arrive in Australia, creating a penal colony
• Captain Arthur Phillip and British colonists lift the Union Flag at Sydney Cove, Australia. This day is now celebrated as Australia Day
• New Hampshire becomes the 9th state to ratify the US Constitution, after which the Constitution was put into effect.
• The Russian army, under the leadership of Grigory Potemkin, Occupy Ocharov

### 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 1789 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 27 Jan. 2020, https://www.officialdata.org/inflation-rate-in-1789.