# £1 in 1985 is worth £0.79 in 1981

£

## Value of £1 from 1985 to 1981

According to the Office for National Statistics composite price index, prices in 1981 are 20.95% lower than average prices since 1985. The British pound experienced an average inflation rate of 6.05% per year during this period, causing the real value of a pound to decrease.

In other words, £1 in 1985 is equivalent in purchasing power to about £0.79 in 1981, a difference of £-0.21 over 4 years.

The 1981 inflation rate was 11.87%. The inflation rate in 1985 was 6.08%. The 1985 inflation rate is higher compared to the average inflation rate of 3.24% per year between 1985 and 2020.

 Cumulative price change -20.95% Average inflation rate 6.05% Converted amount (£1 base) £0.79 Price difference (£1 base) £-0.21 CPI in 1985 373.200 CPI in 1981 295.000 Inflation in 1981 11.87% Inflation in 1985 6.08%

GBP Inflation since 1750
Annual Rate, the Office for National Statistics CPI

## Buying power of £1 in 1981

This chart shows a calculation of buying power equivalence for £1 in 1981 (price index tracking began in 1750).

For example, if you started with £1, you would need to end with £0.79 in order to "adjust" for inflation (sometimes refered to as "beating inflation").

When £1 is equivalent to £0.79 over time, that means that the "real value" of a single U.K. pound decreases over time. In other words, a pound will pay for fewer items at the store.

This effect explains how inflation erodes the value of a pound over time. By calculating the value in 1981 dollars, the chart below shows how £1 is worth less over 4 years.

According to the Office for National Statistics, each of these GBP amounts below is equal in terms of what it could buy at the time:

Pound inflation: 1981-1985
Year Pound Value Inflation Rate
1981 £1.00 11.87%
1982 £1.09 8.61%
1983 £1.14 4.59%
1984 £1.19 4.98%
1985 £1.27 6.08%
1986 £1.31 3.40%
1987 £1.36 4.17%
1988 £1.43 4.90%
1989 £1.54 7.78%
1990 £1.69 9.46%
1991 £1.79 5.87%
1992 £1.85 3.74%
1993 £1.88 1.59%
1994 £1.93 2.41%
1995 £1.99 3.47%
1996 £2.04 2.41%
1997 £2.11 3.14%
1998 £2.18 3.43%
1999 £2.21 1.54%
2000 £2.28 2.96%
2001 £2.32 1.77%
2002 £2.36 1.67%
2003 £2.42 2.89%
2004 £2.50 2.98%
2005 £2.57 2.82%
2006 £2.65 3.20%
2007 £2.76 4.29%
2008 £2.87 3.99%
2009 £2.86 -0.53%
2010 £2.99 4.61%
2011 £3.15 5.20%
2012 £3.25 3.21%
2013 £3.34 3.04%
2014 £3.42 2.36%
2015 £3.46 0.99%
2016 £3.52 1.74%
2017 £3.64 3.58%
2018 £3.73 2.48%
2019 £3.80 1.80%
2020 £3.86 1.50%*
* Compared to previous annual rate. Not final. See inflation summary for latest 12-month trailing value.

This conversion table shows various other 1981 amounts in 1985 pounds, based on the -20.95% change in prices:

Conversion Table: Value of a pound in 1985
Initial value Equivalent value
£1 pound in 1981 £1.27 pounds in 1985
£5 pounds in 1981 £6.33 pounds in 1985
£10 pounds in 1981 £12.65 pounds in 1985
£50 pounds in 1981 £63.25 pounds in 1985
£100 pounds in 1981 £126.51 pounds in 1985
£500 pounds in 1981 £632.54 pounds in 1985
£1,000 pounds in 1981 £1,265.08 pounds in 1985
£5,000 pounds in 1981 £6,325.42 pounds in 1985
£10,000 pounds in 1981 £12,650.85 pounds in 1985
£50,000 pounds in 1981 £63,254.24 pounds in 1985
£100,000 pounds in 1981 £126,508.47 pounds in 1985
£500,000 pounds in 1981 £632,542.37 pounds in 1985
£1,000,000 pounds in 1981 £1,265,084.75 pounds in 1985

## How to Calculate Inflation Rate for £1, 1981 to 1985

Our calculations use the following inflation rate formula to calculate the change in value between 1981 and 1985:

CPI in 1981 CPI in 1985
×
1985 GBP value
=
1981 GBP value

Then plug in historical CPI values. The U.K. CPI was 373.2 in the year 1985 and 295 in 1981:

295373.2
×
£1
=
£0.79

£1 in 1985 has the same "purchasing power" or "buying power" as £0.79 in 1981.

To get the total inflation rate for the 4 years between 1981 and 1985, we use the following formula:

CPI in 1981 - CPI in 1985CPI in 1985
×
100
=
Cumulative inflation rate (4 years)

Plugging in the values to this equation, we get:

295 - 373.2373.2
×
100
=
-21%

## News headlines from 1981

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

• Mikhail Gorbachev replaces Konstantin Chernenko as leader of the Soviet Union.
• Earthquake with a magnitude of 8.1 rocks Mexico City and kills 10,000 people, leaving over 250,000 homeless.
• Mikhail Gorbachev (leader of the Soviet Union) and Ronald Reagan (President of the United States) meet for the first time.
• Ernie Wise makes the first mobile phone call in the UK.

## Data Source & Citation

Raw data for these calculations comes from the composite price index published by the UK Office for National Statistics (ONS). A composite index is created by combining price data from several different published sources, both official and unofficial. The Consumer Price Index, normally used to compute inflation, has only been tracked since 1988. All inflation calculations after 1988 use the Office for National Statistics' Consumer Price Index, except for 2017, which is based on The Bank of England's forecast.

You may use the following MLA citation for this page: “£1 in 1985 → 1981 | UK Inflation Calculator.” Official Inflation Data, Alioth Finance, 25 Oct. 2020, https://www.officialdata.org/uk/inflation/1985?amount=1&endYear=1981.

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.

#### 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.

 Cumulative price change -20.95% Average inflation rate 6.05% Converted amount (£1 base) £0.79 Price difference (£1 base) £-0.21 CPI in 1985 373.200 CPI in 1981 295.000 Inflation in 1981 11.87% Inflation in 1985 6.08%