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# U.S. inflation rate in 1878: -4.76%

### Inflation in 1878 and Its Effect on Dollar Value

Purchasing power increased by 4.76% in 1878 compared to 1877. On average, you would have to spend 4.76% less money in 1878 than in 1877 for the same item. This is an example of deflation.

In other words, \$1 in 1877 is equivalent in purchasing power to about \$0.95 in 1878.

The 1877 inflation rate was -1.87%. The inflation rate in 1878 was -4.76%. The 1878 inflation rate is lower compared to the average inflation rate of 2.31% per year between 1878 and 2020.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1878 was 10.00. It was 10.50 in the previous year, 1877. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation. Because the 1878 CPI is less than 1877 CPI, negative inflation (also known as deflation) has occurred.

 Average inflation rate -4.76% Converted amount (\$1 base) \$0.95 Price difference (\$1 base) \$-0.05 CPI in 1877 10.500 CPI in 1878 10.000 Inflation in 1877 -1.87% Inflation in 1878 -4.76%

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 1877 would be equivalent to £0.98 in 1878, an absolute change of £-0.02 and a cumulative change of -2.06%.

Compare these numbers to the US's overall absolute change of \$-0.05 and total percent change of -4.76%.

### 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 1877 and 1878.

Compare these values to the overall average of -4.76% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1877 → 1878
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 1877. This table and charts use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1877 to 1878

This inflation calculator uses the following inflation rate formula:

CPI in 1878CPI in 1877
×
1877 USD value
=
1878 USD value

Then plug in historical CPI values. The U.S. CPI was 10.5 in the year 1877 and 10 in 1878:

1010.5
×
\$1
=
\$0.95

\$1 in 1877 has the same "purchasing power" or "buying power" as \$0.95 in 1878.

To get the total inflation rate for the 1 years between 1877 and 1878, we use the following formula:

CPI in 1878 - CPI in 1877CPI in 1877
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

10 - 10.510.5
×
100
=
-5%

### 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 1877, our investment would be nominally worth approximately \$1.15 in 1878. This is a return on investment of 15.03%, with an absolute return of \$0.15 on top of the original \$1.

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 -5.00% of returns (\$-0.06) during this period. This means the inflation-adjusted real return of our \$1 investment is \$0.21. You may also want to account for capital gains tax, which would take your real return down to around \$0 for most people.

Investment in S&P 500 Index, 1877-1878
Original Amount Final Amount Change
Nominal \$1 \$1.15 15.03%
Real
\$1 \$1.21 20.79%

Information displayed above may differ slightly from other S&P 500 calculators. Minor discrepancies can occur because we use the latest CPI data for inflation, annualized inflation numbers for previous years, and we compute S&P price and dividends from January of 1877 to latest available data for 1878 using average monthly close price.

For more details on the S&P 500 between 1877 and 1878, see the stock market returns calculator.

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

• Installation of the first telephone in Massachusetts.
• Declaration of Russia's war on the Ottoman Empire, the conflict is known as Russo-Turkish war.
• First human voice recording of Thomas Edison reciting "Mary had a little lamb".

### 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 1878 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 26 Jan. 2020, https://www.officialdata.org/inflation-rate-in-1878.