U.S. inflation rate in 2021: 4.70%


Inflation in 2021 and its effect on dollar value

$1 in 2020 is equivalent in purchasing power to about $1.05 in 2021. The dollar had an average inflation rate of 4.70% per year between 2020 and 2021, producing a cumulative price increase of 4.70%. Purchasing power decreased by 4.70% in 2021 compared to 2020. On average, you would have to spend 4.70% more money in 2021 than in 2020 for the same item.

This means that prices in 2021 are 1.05 times as high as average prices since 2020, according to the Bureau of Labor Statistics consumer price index.

The inflation rate in 2020 was 1.23%. The inflation rate in 2021 was 4.70%. The 2021 inflation rate is lower compared to the average inflation rate of 5.05% per year between 2021 and 2024.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 2021 was 270.97. It was 258.81 in the previous year, 2020. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.

Inflation from 2020 to 2021
Average inflation rate4.70%
Converted amount
$1 base
Price difference
$1 base
CPI in 2020258.812
CPI in 2021270.970
Inflation in 20201.23%
Inflation in 20214.70%
$1 in 2020$1.05 in 2021

Recent USD inflation
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 2020 to 2021 (figures shown are purchasing power equivalents of $1):

Tampa, Florida experienced the highest rate of inflation during the 1 years between 2020 and 2021 (6.03%).

San Diego, California experienced the lowest rate of inflation during the 1 years between 2020 and 2021 (2.19%).

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 2020 would be equivalent to £1.02 in 2021, an absolute change of £0.02 and a cumulative change of 2.49%.

In Canada, CA$1.00 in 2020 would be equivalent to CA$1.03 in 2021, an absolute change of CA$0.03 and a cumulative change of 3.40%.

Compare these numbers to the US's overall absolute change of $0.05 and total percent change of 4.70%.

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.

Between 2020 and 2021:

This chart shows the average rate of inflation for select CPI categories between 2020 and 2021.

Compare these values to the overall average of 4.70% per year:

CategoryAvg Inflation (%)Total Inflation (%)$1 in 2020 → 2021
Food and beverages3.823.821.04
Medical care1.231.231.01
Education and communication1.651.651.02
Other goods and services3.123.121.03

For all these visualizations, it's important to note that not all categories may have been tracked since 2020. This table and charts use the earliest available data for each category.

How to calculate inflation rate for $1, 2020 to 2021

Our calculations use the following inflation rate formula to calculate the change in value between 2020 and 2021:

CPI in 2021 CPI in 2020
2020 USD value
2021 USD value

Then plug in historical CPI values. The U.S. CPI was 258.81166666667 in the year 2020 and 270.97016666667 in 2021:


$1 in 2020 has the same "purchasing power" or "buying power" as $1.05 in 2021.

To get the total inflation rate for the 1 years between 2020 and 2021, we use the following formula:

CPI in 2021 - CPI in 2020CPI in 2020
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

270.97016666667 - 258.81166666667258.81166666667

Alternate Measurements of Inflation

There are multiple ways to measure inflation. Published rates of inflation will vary depending on methodology. The Consumer Price Index, used above, is the most common standard used globally.

Alternative measurements are sometimes used based on context and economic/political circumstances. Below are a few examples of alternative measurements.

Personal Consumption Expenditures (PCE) Inflation

The PCE Price Index is the U.S. Federal Reserve's preferred measure of inflation, compiled by the Bureau of Economic Analysis. It measures the change in prices of goods and services purchased by consumers.

The PCE Price Index changed by 4.17% per year on average between 2020 and 2021. The total PCE inflation between these dates was 4.17%. In 2020, PCE inflation was 1.08%.

This means that the PCE Index equates $1 in 2020 with $1.04 in 2021, a difference of $0.04. Compare this to the standard CPI measurement, which equates $1 with $1.05. The PCE measured -0.52% inflation compared to standard CPI.

For more information on the difference between PCE and CPI, see this analysis provided by the Bureau of Labor Statistics.

Core Inflation

Also of note is the Core CPI, which uses the standard CPI but omits the more volatile categories of food and energy.

Core inflation averaged 3.57% per year between 2020 and 2021 (vs all-CPI inflation of 4.70%), for an inflation total of 3.57%. In 2020, core inflation was 1.70%.

When using the core inflation measurement, $1 in 2020 is equivalent in buying power to $1.04 in 2021, a difference of $0.04. Recall that the converted amount is $1.05 when all items including food and energy are measured.

Chained Inflation

Chained CPI is an alternative measurement that takes into account how consumers adjust spending for similar items. Chained inflation averaged 4.47% per year between 2020 and 2021, a total inflation amount of 4.47%.

According to the Chained CPI measurement, $1 in 2020 is equal in buying power to $1.04 in 2021, a difference of $0.04 (versus a converted amount of $1.05/change of $0.05 for All Items).

In 2020, chained inflation was 1.07%.

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 2020, our investment would be nominally worth approximately $1.44 in 2021. This is a return on investment of 44.04%, with an absolute return of $0.44 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 4.49% of returns ($0.06) during this period. This means the inflation-adjusted real return of our $1 investment is $0.38. 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, 2020-2021
Original AmountFinal AmountChange
Inflation Adjusted

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 2020 to latest available data for 2021 using average monthly close price.

For more details on the S&P 500 between 2020 and 2021, see the stock market returns calculator.

Data source & citation

Raw data for these calculations comes from the Bureau of Labor Statistics' (CPI), established in 1913. Price index data from 1774 to 1912 is sourced from a historical study conducted by political science professor Robert Sahr at Oregon State University and from the American Antiquarian Society. Price index data from 1634 to 1773 is from the American Antiquarian Society, using British pound equivalents.

You may use the following MLA citation for this page: “Inflation Rate in 2021 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 13 Jul. 2024, https://www.officialdata.org/inflation-rate-in-2021.

Special thanks to QuickChart for their chart image API, which is used for chart downloads.

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

Ian Webster

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.

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» Read more about inflation and investment.

Inflation from 2020 to 2021
Average inflation rate4.70%
Converted amount
$1 base
Price difference
$1 base
CPI in 2020258.812
CPI in 2021270.970
Inflation in 20201.23%
Inflation in 20214.70%
$1 in 2020$1.05 in 2021