# U.S. inflation rate in 1885: -1.02%

\$

## Inflation in 1885 and its effect on dollar value

Purchasing power increased by 1.02% in 1885 compared to 1884. On average, you would have to spend 1.02% less money in 1885 than in 1884 for the same item. This is an example of deflation.

In other words, \$1 in 1884 is equivalent in purchasing power to about \$0.99 in 1885.

The 1884 inflation rate was -2.97%. The inflation rate in 1885 was -1.02%. The 1885 inflation rate is lower compared to the average inflation rate of 2.46% per year between 1885 and 2020.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1885 was 9.70. It was 9.80 in the previous year, 1884. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation. Because the 1885 CPI is less than 1884 CPI, negative inflation (also known as deflation) has occurred.

 Average inflation rate -1.02% Converted amount (\$1 base) \$0.99 Price difference (\$1 base) \$-0.01 CPI in 1884 9.800 CPI in 1885 9.700 Inflation in 1884 -2.97% Inflation in 1885 -1.02%

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 1884 would be equivalent to £0.97 in 1885, an absolute change of £-0.03 and a cumulative change of -3.30%.

Compare these numbers to the US's overall absolute change of \$-0.01 and total percent change of -1.02%.

## Inflation by Spending Category

CPI is the weighted combination of many categories of spending that are tracked by the government. Breaking down these categories helps explain the main drivers behind price changes. This chart shows the average rate of inflation for select CPI categories between 1884 and 1885.

Compare these values to the overall average of -1.02% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1884 → 1885
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 1884. This table and charts use the earliest available data for each category.

## How to Calculate Inflation Rate for \$1, 1884 to 1885

Our calculations use the following inflation rate formula to calculate the change in value between 1884 and 1885:

CPI in 1885 CPI in 1884
×
1884 USD value
=
1885 USD value

Then plug in historical CPI values. The U.S. CPI was 9.8 in the year 1884 and 9.7 in 1885:

9.79.8
×
\$1
=
\$0.99

\$1 in 1884 has the same "purchasing power" or "buying power" as \$0.99 in 1885.

To get the total inflation rate for the 1 years between 1884 and 1885, we use the following formula:

CPI in 1885 - CPI in 1884CPI in 1884
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

9.7 - 9.89.8
×
100
=
-1%

## 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 1884, our investment would be nominally worth approximately \$1.14 in 1885. This is a return on investment of 14.00%, with an absolute return of \$0.14 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 -1.03% of returns (\$-0.01) during this period. This means the inflation-adjusted real return of our \$1 investment is \$0.15. 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, 1884-1885
Original Amount Final Amount Change
Nominal \$1 \$1.14 14.00%
Real
\$1 \$1.15 15.18%

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 1884 to latest available data for 1885 using average monthly close price.

For more details on the S&P 500 between 1884 and 1885, see the stock market returns calculator.

## News headlines from 1884

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

• The first volume of the Oxford English Dictionary is published.
• Mahdist forces begin the Siege of Khartoum which lasts 10 months.
• American Herman Hollerith patents the mechanical tabulating machine. This is considered the beginning of data processing.
• Organization of Colonization of Africa at international conference in Berlin.

## 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 1885 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 24 May. 2020, https://www.officialdata.org/inflation-rate-in-1885.

Special thanks to QuickChart for providing downloadable chart images.

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

#### About the author

Ian Webster is an engineer and data expert based in San Mateo, California. He has worked for Google, NASA, and consulted for governments around the world on data pipelines and data analysis. Disappointed by the lack of clear resources on the impacts of inflation on economic indicators, Ian believes this website serves as a valuable public tool. Ian earned his degree in Computer Science from Dartmouth College.

 Average inflation rate -1.02% Converted amount (\$1 base) \$0.99 Price difference (\$1 base) \$-0.01 CPI in 1884 9.800 CPI in 1885 9.700 Inflation in 1884 -2.97% Inflation in 1885 -1.02%