$1 in 1985 is worth $2.75 today.
The value of $1 from 1985 to 2022
$1 in 1985 has the purchasing power of about $2.75 today, a $1.75 increase in 37 years. Between 1985 and today, the dollar experienced an average annual inflation rate of 2.78%, resulting in a cumulative price increase of 175.35%.
According to the Bureau of Labor Statistics consumer price index, today's prices are several times higher than the average price since 1985.
In 1985, the inflation rate was 13.55%. Inflation is now 3.55% higher than it was last year. If this figure holds true, $1 today will be worth $4.55 next year in purchasing power.
Inflation from 1985 to 2022
| Summary | Value |
|---|---|
| Cumulative price change (from 1985 to today) | 175.35% |
| Average inflation rate (from 1985 to today) | 2.78% |
| Converted amount | $2.75 |
| Price Difference | $1.75 |
| CPI in 1985 | 107.6 |
| CPI in 2022 | 296.276 |
| Inflation in 1985 | 13.55% |
| Inflation in 2022 | 3.55% |
| $1 in 1985 | $2.75 in 2022 |
Buying power of $1 in 1985
If you had $1 in your hand in 1985, its adjusted value for inflation today would be $2.75. Put another way, you would need $2.75 to beat the rising inflation. When $1 becomes equivalent to $2.75 over time, the "real value" of a single US dollar decreases. In other words, a dollar will pay for fewer items at the store.
This effect explains how inflation gradually erodes the value of a dollar. By calculating the value in 1985 dollars, it's evident how $1 loses its worth over 37 years.
Dollar inflation for $1 from 1985 to 2022
The below tabular column shows the effect of inflation on $1 in the year 1985 to the year 1985.
| Year | Dollar Value | Inflation Rate |
|---|---|---|
| 1985 | 1 | 13.55% |
| 1986 | 1.02 | 1.86% |
| 1987 | 1.06 | 3.65% |
| 1988 | 1.1 | 4.14% |
| 1989 | 1.15 | 4.82% |
| 1990 | 1.21 | 5.40% |
| 1991 | 1.27 | 4.21% |
| 1992 | 1.3 | 3.01% |
| 1993 | 1.34 | 2.99% |
| 1994 | 1.38 | 2.56% |
| 1995 | 1.42 | 2.83% |
| 1996 | 1.46 | 2.95% |
| 1997 | 1.49 | 2.29% |
| 1998 | 1.52 | 1.56% |
| 1999 | 1.55 | 2.21% |
| 2000 | 1.6 | 3.36% |
| 2001 | 1.65 | 2.85% |
| 2002 | 1.67 | 1.58% |
| 2003 | 1.71 | 2.28% |
| 2004 | 1.76 | 2.66% |
| 2005 | 1.82 | 3.39% |
| 2006 | 1.87 | 3.23% |
| 2007 | 1.93 | 2.85% |
| 2008 | 2 | 3.84% |
| 2009 | 1.99 | -0.36% |
| 2010 | 2.03 | 1.64% |
| 2011 | 2.09 | 3.16% |
| 2012 | 2.13 | 2.07% |
| 2013 | 2.17 | 1.46% |
| 2014 | 2.2 | 1.62% |
| 2015 | 2.2 | 0.12% |
| 2016 | 2.23 | 1.26% |
| 2017 | 2.28 | 2.13% |
| 2018 | 2.33 | 2.49% |
| 2019 | 2.38 | 1.76% |
| 2020 | 2.41 | 1.23% |
| 2021 | 2.52 | 4.70% |
| 2022 | 2.76 | 8.52% |
Conversion of 1985 dollars to today's price
Based on the 175.35% change in prices, the following 1985 amounts are shown in today's dollars:
| Initial value | Today value |
|---|---|
| $1 dollar in 1985 | $2.75 dollars today |
| $5 dollars in 1985 | $13.77 dollars today |
| $10 dollars in 1985 | $27.53 dollars today |
| $50 dollars in 1985 | $137.67 dollars today |
| $100 dollars in 1985 | $275.35 dollars today |
| $500 dollars in 1985 | $1376.75 dollars today |
| $1,000 dollars in 1985 | $2753.49 dollars today |
| $5,000 dollars in 1985 | $13767.47 dollars today |
| $10,000 dollars in 1985 | $27534.94 dollars today |
| $50,000 dollars in 1985 | $137674.72 dollars today |
| $100,000 dollars in 1985 | $275349.44 dollars today |
| $500,000 dollars in 1985 | $1376747.21 dollars today |
| $1,000,000 dollars in 1985 | $2753494.42 dollars today |
How to calculate the inflated value of $1 in 1985
To calculate the change in value between 1985 and today, we use the following inflation rate formula:
CPI Today / CPI in 1985 x USD Value in 1985 = Current USD Value
By plugging the values into the formula above, we get:
296.276/ 107.6 x $1 = $2.75
To buy the same product that you could buy for $1 in 1985, you would need $2.75 in 2022.
To calculate the cumulative or total inflation rate in the past 37 years between 1985 and 2022, we use the following formula:
CPI in 2022 - CPI in 1985 / CPI in 1985 x 100 = Cumulative Inflation Rate
By inserting the values to this equation, we get:
( 296.276 - 107.6 / 107.6) x 100 = 175.35%
Alternate method to calculate today's value of money after inflation - Using compound interest formula
Given that money changes over time due to inflation, which acts as compound interest, we can use the following formula:
FV = PV (1+i/100)^n
where,
- FV = Future value
- PV = Present value
- i: Average interest rate (inflation)
- n: Number of times the interest is compounded (i.e. # of years)
The future value in this case represents the amount obtained after applying the inflation rate to our initial value. In other words, it indicates how much $1 is worth today. We have 37 years between 2022 and 1985. The average inflation rate was 2.7753021398814%.
Plugging in the values into the formula, we get:
1 (1+ % 2.78/ 100 ) ^ 37 = $2.75