Eli: 21.9 CPI

Inflation fluctuates. It is very unstable, and changes very frequently. The government came up with a system to calculate the changes in value, called the CPI (consumer price index.) This is to figure out the cost of the necessities of living – food, clothes, cars, electronics, etc. This system allows us to compare dollars from one year to another, in a way that shows us the constant dollar. Ten dollars now does not mean the same exact thing as 5 dollars 10 years ago. What we learned in class is to calculate what an item or amount of money is worth in a certain number of years in today’s worth. The CPI allows us to calculate what values were in the past.

Cost Year A/Cost Year B = CPI Year A/CPI Year B. This is long version of the equation. The shorter version that most people use, and is most useful is this:

Recent Dollars = Old Dollars (CPI of recent year/CPI of old year)

The government has calculated the CPI rates for us, and we can see that in the early 1900s, the CPI was in the tens, and the CPI today is about 218. There was a dramatic increase.

The government bureau that created all of these numbers is the Labor Statistics Bureau.

Below is the table showing the CPI that the LSB came up with:

Year Annual Average Annual Percent Change (rate of inflation) 1913 9.9 1914 10.0 1.3% 1915 10.1 0.9% 1916 10.9 7.7% 1917 12.8 17.8% 1918 15.0 17.3% 1919 17.3 15.2% 1920 20.0 15.6% 1921 17.9 -10.9% 1922 16.8 -6.2% 1923 17.1 1.8% 1924 17.1 0.4% 1925 17.5 2.4% 1926 17.7 0.9% 1927 17.4 -1.9% 1928 17.2 -1.2% 1929 17.2 0.0% 1930 16.7 -2.7% 1931 15.2 -8.9% 1932 13.6 -10.3% 1933 12.9 -5.2% 1934 13.4 3.5% 1935 13.7 2.6% 1936 13.9 1.0% 1937 14.4 3.7% 1938 14.1 -2.0% 1939 13.9 -1.3% 1940 14.0 0.7% 1941 14.7 5.1% 1942 16.3 10.9% 1943 17.3 6.0% 1944 17.6 1.6% 1945 18.0 2.3% 1946 19.5 8.5% 1947 22.3 14.4% 1948 24.0 7.7% 1949 23.8 -1.0% 1950 24.1 1.1% 1951 26.0 7.9% 1952 26.6 2.3% 1953 26.8 0.8% 1954 26.9 0.4% 1955 26.8 -0.3% 1956 27.2 1.5% 1957 28.1 3.4% 1958 28.9 2.7% 1959 29.2 0.9% 1960 29.6 1.5% 1961 29.9 1.1% 1962 30.3 1.2% 1963 30.6 1.3% 1964 31.0 1.3% 1965 31.5 1.6% 1966 32.5 3.0% 1967 33.4 2.8% 1968 34.8 4.2% 1969 36.7 5.4% 1970 38.8 5.9% 1971 40.5 4.2% 1972 41.8 3.3% 1973 44.4 6.3% 1974 49.3 11.0% 1975 53.8 9.1% 1976 56.9 5.8% 1977 60.6 6.5% 1978 65.2 7.6% 1979 72.6 11.3% 1980 82.4 13.5% 1981 90.9 10.4% 1982 96.5 6.2% 1983 99.6 3.2% 1984 103.9 4.4% 1985 107.6 3.5% 1986 109.7 1.9% 1987 113.6 3.6% 1988 118.3 4.1% 1989 123.9 4.8% 1990 130.7 5.4% 1991 136.2 4.2% 1992 140.3 3.0% 1993 144.5 3.0% 1994 148.2 2.6% 1995 152.4 2.8% 1996 156.9 2.9% 1997 160.5 2.3% 1998 163.0 1.5% 1999 166.6 2.2% 2000 172.2 3.4% 2001 177.0 2.8% 2002 179.9 1.6% 2003 184.0 2.3% 2004 188.9 2.7% 2005 195.3 3.4% 2006 201.6 3.2% 2007 207.3 2.8% 2008 215.2 3.8% 2009 214.5 -0.3% 2010 218.1 1.6% 2011* 225.4 3.3%

Next scribe is Gil.