# U.S. inflation rate in 1920: 15.61%

## Inflation Calculator

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### Inflation in 1920 and Its Effect on Dollar Value

Purchasing power decreased by 15.61% in 1920 compared to 1919. On average, you would have to spend 15.61% more money in 1920 than in 1919 for the same item.

In other words, \$1 in 1919 is equivalent in purchasing power to about \$1.16 in 1920.

The 1919 inflation rate was 14.57%. The inflation rate in 1920 was 15.61%. The 1920 inflation rate is higher compared to the average inflation rate of 2.59% per year between 1920 and 2020.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1920 was 20.00. It was 17.30 in the previous year, 1919. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.

 Average inflation rate 15.61% Converted amount (\$1 base) \$1.16 Price difference (\$1 base) \$0.16 CPI in 1919 17.300 CPI in 1920 20.000 Inflation in 1919 14.57% Inflation in 1920 15.61%

USD Inflation since 1913
Annual Rate, the 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 1919 to 1920 (figures shown are purchasing power equivalents of \$1):

Detroit, Michigan experienced the highest rate of inflation during the 1 years between 1919 and 1920 (21.92%).

San Francisco, California experienced the lowest rate of inflation during the 1 years between 1919 and 1920 (16.00%).

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 1919 would be equivalent to £1.16 in 1920, an absolute change of £0.16 and a cumulative change of 15.53%.

In Canada, CA\$1.00 in 1919 would be equivalent to CA\$1.10 in 1920, an absolute change of CA\$0.10 and a cumulative change of 9.80%.

Compare these numbers to the US's overall absolute change of \$0.16 and total percent change of 15.61%.

### 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 1919 and 1920.

Compare these values to the overall average of 15.61% per year:

Category Avg Inflation (%) Total Inflation (%) \$1 in 1919 → 1920
Food and beverages 0.00 0.00 1.00
Housing 0.00 0.00 1.00
Apparel 13.43 13.43 1.13
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 1919. This table and charts use the earliest available data for each category.

### How to Calculate Inflation Rate for \$1, 1919 to 1920

This inflation calculator uses the following inflation rate formula:

CPI in 1920CPI in 1919
×
1919 USD value
=
1920 USD value

Then plug in historical CPI values. The U.S. CPI was 17.3 in the year 1919 and 20 in 1920:

2017.3
×
\$1
=
\$1.16

\$1 in 1919 has the same "purchasing power" or "buying power" as \$1.16 in 1920.

To get the total inflation rate for the 1 years between 1919 and 1920, we use the following formula:

CPI in 1920 - CPI in 1919CPI in 1919
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

20 - 17.317.3
×
100
=
16%

### 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 1919, our investment would be nominally worth approximately \$1.03 in 1920. This is a return on investment of 2.97%, with an absolute return of \$0.03 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 13.50% of returns (\$0.14) during this period. This means the inflation-adjusted real return of our \$1 investment is \$-0.11. 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, 1919-1920
Original Amount Final Amount Change
Nominal \$1 \$1.03 2.97%
Real
\$1 \$0.89 -10.93%

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 1919 to latest available data for 1920 using average monthly close price.

For more details on the S&P 500 between 1919 and 1920, see the stock market returns calculator.

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

• The German Farmer's Party, which would later develop into National Socialist Party, is formed.
• The Bolshevik party re-establishes the idea of a five-member Politburo at the 8th Congress of the Russian Communist Party, making it the central body of political power in the Soviet Union. Its first members were Vladimir Lenin, Leon Trotsky, Joseph Stalin, Lev Kamenev and Nikolai Krestinsky.
• The Turkish War of Independence begins after Mustafa Kemal Ataturk's lands at Samsun, on the Black Sea.
• The Treaty of Versailles is signed ending World War I and establishing the League of Nations.

### 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 1920 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 25 Mar. 2020, https://www.officialdata.org/inflation-rate-in-1920.