$1 in 1988 is worth $2.5 today.
The value of $1 from 1988 to 2022
$1 in 1988 has the purchasing power of about $2.5 today, a $1.5 increase in 34 years. Between 1988 and today, the dollar experienced an average annual inflation rate of 2.74%, resulting in a cumulative price increase of 150.44%.
According to the Bureau of Labor Statistics consumer price index, today's prices are several times higher than the average price since 1988.
In 1988, the inflation rate was 13.55%. Inflation is now 4.08% higher than it was last year. If this figure holds true, $1 today will be worth $5.08 next year in purchasing power.
Inflation from 1988 to 2022
| Summary | Value |
|---|---|
| Cumulative price change (from 1988 to today) | 150.44% |
| Average inflation rate (from 1988 to today) | 2.74% |
| Converted amount | $2.5 |
| Price Difference | $1.5 |
| CPI in 1988 | 118.3 |
| CPI in 2022 | 296.276 |
| Inflation in 1988 | 13.55% |
| Inflation in 2022 | 4.08% |
| $1 in 1988 | $2.5 in 2022 |
Buying power of $1 in 1988
If you had $1 in your hand in 1988, its adjusted value for inflation today would be $2.5. Put another way, you would need $2.5 to beat the rising inflation. When $1 becomes equivalent to $2.5 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 1988 dollars, it's evident how $1 loses its worth over 34 years.
Dollar inflation for $1 from 1988 to 2022
The below tabular column shows the effect of inflation on $1 in the year 1988 to the year 1988.
| Year | Dollar Value | Inflation Rate |
|---|---|---|
| 1988 | 1 | 13.55% |
| 1989 | 1.05 | 4.82% |
| 1990 | 1.1 | 5.40% |
| 1991 | 1.15 | 4.21% |
| 1992 | 1.19 | 3.01% |
| 1993 | 1.22 | 2.99% |
| 1994 | 1.25 | 2.56% |
| 1995 | 1.29 | 2.83% |
| 1996 | 1.33 | 2.95% |
| 1997 | 1.36 | 2.29% |
| 1998 | 1.38 | 1.56% |
| 1999 | 1.41 | 2.21% |
| 2000 | 1.46 | 3.36% |
| 2001 | 1.5 | 2.85% |
| 2002 | 1.52 | 1.58% |
| 2003 | 1.56 | 2.28% |
| 2004 | 1.6 | 2.66% |
| 2005 | 1.65 | 3.39% |
| 2006 | 1.7 | 3.23% |
| 2007 | 1.75 | 2.85% |
| 2008 | 1.82 | 3.84% |
| 2009 | 1.81 | -0.36% |
| 2010 | 1.84 | 1.64% |
| 2011 | 1.9 | 3.16% |
| 2012 | 1.94 | 2.07% |
| 2013 | 1.97 | 1.46% |
| 2014 | 2 | 1.62% |
| 2015 | 2 | 0.12% |
| 2016 | 2.03 | 1.26% |
| 2017 | 2.07 | 2.13% |
| 2018 | 2.12 | 2.49% |
| 2019 | 2.16 | 1.76% |
| 2020 | 2.19 | 1.23% |
| 2021 | 2.29 | 4.70% |
| 2022 | 2.51 | 8.52% |
Conversion of 1988 dollars to today's price
Based on the 150.44% change in prices, the following 1988 amounts are shown in today's dollars:
| Initial value | Today value |
|---|---|
| $1 dollar in 1988 | $2.5 dollars today |
| $5 dollars in 1988 | $12.52 dollars today |
| $10 dollars in 1988 | $25.04 dollars today |
| $50 dollars in 1988 | $125.22 dollars today |
| $100 dollars in 1988 | $250.44 dollars today |
| $500 dollars in 1988 | $1252.22 dollars today |
| $1,000 dollars in 1988 | $2504.45 dollars today |
| $5,000 dollars in 1988 | $12522.23 dollars today |
| $10,000 dollars in 1988 | $25044.46 dollars today |
| $50,000 dollars in 1988 | $125222.32 dollars today |
| $100,000 dollars in 1988 | $250444.63 dollars today |
| $500,000 dollars in 1988 | $1252223.16 dollars today |
| $1,000,000 dollars in 1988 | $2504446.32 dollars today |
How to calculate the inflated value of $1 in 1988
To calculate the change in value between 1988 and today, we use the following inflation rate formula:
CPI Today / CPI in 1988 x USD Value in 1988 = Current USD Value
By plugging the values into the formula above, we get:
296.276/ 118.3 x $1 = $2.5
To buy the same product that you could buy for $1 in 1988, you would need $2.5 in 2022.
To calculate the cumulative or total inflation rate in the past 34 years between 1988 and 2022, we use the following formula:
CPI in 2022 - CPI in 1988 / CPI in 1988 x 100 = Cumulative Inflation Rate
By inserting the values to this equation, we get:
( 296.276 - 118.3 / 118.3) x 100 = 150.44%
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 34 years between 2022 and 1988. The average inflation rate was 2.7369847871886%.
Plugging in the values into the formula, we get:
1 (1+ % 2.74/ 100 ) ^ 34 = $2.5