USA Inflation Calculator
1913 – 2026

The annual US inflation rate (CPI-U) was 2.4% for the 12 months ending February 2026, according to the Bureau of Labor Statistics (BLS). This was unchanged from January 2026 and represented the lowest reading since May 2025. Core CPI (excluding food and energy) was also 2.4% (annual) and 2.5% annually through February 2026. Monthly changes: CPI rose 0.2% in January 2026 and 0.3% in February 2026 on a seasonally adjusted basis. The Federal Reserve's long-term inflation target is 2.0% using the PCE price index. The March 2026 CPI report is scheduled for release on April 10, 2026.

This calculator uses the official CPI-U (Consumer Price Index for All Urban Consumers) data published by the US Bureau of Labor Statistics. To calculate dollar value changes, we use the formula: Adjusted Amount = Original Amount × (CPI in Target Year ÷ CPI in Starting Year). The CPI-U is indexed to 1982–84 = 100. For example, if the CPI in 1980 was 82.4 and in 2026 is approximately 318, then $100 in 1980 = $100 × (318 ÷ 82.4) = $385.92 in 2026 dollars. We use annual average CPI values for full-year calculations, and the most recent monthly CPI value for calculations involving 2026.

The Consumer Price Index (CPI) measures the average change in prices paid by urban consumers for a market basket of goods and services. The BLS collects prices monthly from approximately 26,000 retail stores and 4,000 housing units across 87 urban areas. The "basket" is weighted by typical consumer spending patterns and includes: food and beverages (~14.3%), shelter (~36.2%), transportation (~17.9%), medical care (~8.9%), education and communication (~6.3%), recreation (~5.2%), apparel (~2.5%), and other goods and services (~4.7%). The CPI-U covers about 93% of the US population (all urban consumers).

Both measure inflation, but with key differences: CPI (Consumer Price Index): published by BLS, measures what consumers pay for a fixed basket of goods. PCE (Personal Consumption Expenditures): published by BEA, measures what is spent on behalf of consumers (including employer-paid healthcare). The Federal Reserve uses the PCE as its primary inflation target. PCE typically runs about 0.2–0.4 percentage points lower than CPI, because it allows for consumer substitution (if beef becomes expensive, consumers buy more chicken, which PCE captures). The Fed's 2% target refers to PCE inflation. Most headline news reports and public inflation calculators use CPI, which is what this calculator uses.

The US dollar has lost approximately 97% of its purchasing power since the Federal Reserve was established in 1913. What cost $1.00 in 1913 costs approximately $32–33 in 2026 dollars — a cumulative inflation of about 3,200%. Put differently, $1 in 2026 buys roughly what 3 cents bought in 1913. The most dramatic purchasing power losses occurred during: WWI (1917–1920), WWII (1942–1948), the 1970s oil crisis and stagflation period (1973–1981, with CPI briefly hitting 14.8% in 1980), and the post-pandemic surge (2021–2023, peaking at 9.1% in June 2022).

The highest annual CPI inflation rates in US history were during WWI (1917: 17.8%, 1918: 18.0%) and the Korean War era (1947: 14.4%). In the modern Federal Reserve era, the peak was June 1980 at 14.8% annual rate. The most recent peak was June 2022 at 9.1%, the highest since November 1981. Historical context: the Revolutionary War saw extreme hyperinflation with Continental currency. The Civil War saw inflation exceed 20%. The Great Depression (1930–1933) produced significant deflation (falling prices). Since WWII, the US has experienced only brief periods of deflation (2009: −0.4%).

Core inflation excludes food and energy prices from the CPI calculation. The reasoning: food and energy prices are highly volatile and often driven by temporary supply shocks (weather, geopolitical events, crop failures) rather than underlying inflationary pressure in the economy. By stripping out these volatile components, core inflation provides a "cleaner" signal of broad inflationary trends — particularly in services and wages. Core CPI for February 2026: 2.5% (annual). The Fed monitors core PCE (Personal Consumption Expenditures, also excluding food and energy) as its primary target — also around 2.5% in early 2026, above the 2% target.

Inflation has an interesting and often misunderstood relationship with debt. Fixed-rate borrowers benefit from inflation: if you borrowed $200,000 at a fixed mortgage rate 10 years ago, inflation has eroded the real value of that debt. The $200,000 you owe "feels" smaller because wages and prices have risen. This is why long-term fixed-rate debt is generally favorable during inflationary periods — you repay in "cheaper" dollars. However, variable-rate debt (like many credit cards and HELOCs) is dangerous during inflation because the Fed typically raises rates to combat inflation, increasing your interest rate simultaneously. In 2022, the Fed raised rates from 0.25% to 5.25% in response to 9.1% inflation — a historic pace that dramatically increased costs for variable-rate borrowers.

Nominal values are expressed in the currency of the time period — the raw, face-value dollar amounts without adjusting for inflation. Real values are adjusted for inflation, expressed in terms of constant purchasing power. Example: If you earned $50,000 in 2015 and $60,000 in 2025, your nominal salary increased by 20%. But if inflation averaged 2.5% per year over that decade, prices rose about 28% cumulatively. Your real salary actually declined — your $60,000 in 2025 buys less than your $50,000 in 2015 bought. This is why economists and financial analysts use "real" (inflation-adjusted) figures when comparing economic data across different time periods. Our Real Salary calculator above shows exactly this comparison.

The Federal Reserve's 2% inflation target is deliberate policy, not an accident. The reasons for targeting 2% rather than 0%: (1) Buffer against deflation: Zero-inflation leaves little room before tipping into deflation (falling prices), which is economically destructive — consumers delay purchases expecting lower prices, businesses cut jobs and investment, creating a deflationary spiral. Japan's "lost decades" are a well-studied example. (2) Measurement error: CPI may overstate true inflation by 0.5–1.0% due to quality improvements and consumer substitution, so targeting 2% provides a real buffer. (3) Monetary policy flexibility: Higher baseline inflation gives the Fed more room to cut rates below inflation in a recession (negative real rates stimulate borrowing). (4) Wage adjustment: Moderate inflation allows real wages to fall without nominal pay cuts, which workers strongly resist psychologically.

US inflation surged from 1.2% in 2020 to 4.7% in 2021 and peaked at 9.1% in June 2022 — the highest since 1981. The causes were multiple and simultaneous: (1) Supply chain disruptions: COVID-19 shut down factories globally, creating massive goods shortages while demand surged. (2) Fiscal stimulus: The US government injected approximately $5 trillion in stimulus (CARES Act, ARP Act) directly into consumer pockets, boosting demand far beyond supply capacity. (3) Energy price surge: Russia's invasion of Ukraine in February 2022 sent oil and natural gas prices to multi-decade highs. (4) Labor market tightening: The "Great Resignation" created wage-price pressures as businesses competed for workers. (5) Housing surge: Remote work demand drove housing prices and rents to record highs. The Fed responded with 11 rate hikes from March 2022 to July 2023, raising rates from near 0% to 5.25%–5.50%.

The Bureau of Labor Statistics collects price data for the CPI through a meticulous monthly process: (1) Data collectors visit approximately 26,000 retail establishments (grocery stores, gas stations, doctor's offices, etc.) and call housing units in 87 urban areas. (2) They record prices for about 80,000 individual items each month. (3) These prices are weighted by how much consumers actually spend on each category (the "market basket"), derived from the Consumer Expenditure Survey conducted separately. (4) The index is calculated and released around the middle of the following month (e.g., February data released in mid-March). Note: The government shutdown of fall 2025 interrupted data collection in October 2025, causing the BLS to use a "carry-forward" methodology for that month, which may have slightly understated reported inflation through early 2026.

Inflation is the single greatest long-term threat to retirement savings. Key planning principles: (1) Never use nominal returns — always calculate real (inflation-adjusted) returns. 7% nominal return with 3% inflation = 4% real return. (2) Use 2.5%–3.0% as your planning inflation rate (the Fed's 2% target plus a buffer for healthcare, which inflates faster). (3) Social Security has built-in Cost of Living Adjustments (COLAs) tied to CPI — plan around this for your income floor. (4) Healthcare inflation (CPI: 4.1% in Feb 2026) tends to run well above general inflation — budget separately for it. (5) Your portfolio needs to grow faster than inflation. A "safe withdrawal rate" of 4% (the "4% rule") assumes you can replace inflation-adjusted withdrawals. (6) Use our Future Cost projector above to see what today's expenses will cost in retirement.

Inflation: General rise in price levels over time. The current US rate is 2.4% (Feb 2026). Moderate inflation (1–3%) is considered healthy in a growing economy. Deflation: General fall in price levels — negative inflation. Sounds good but is dangerous: consumers delay purchases expecting further price drops, businesses cut jobs, debt burdens increase in real terms, and the economy can spiral downward. The Great Depression was partly a deflationary spiral. The US experienced mild deflation in 2009 (−0.4%). Disinflation: Inflation slowing down — still rising, but at a decreasing rate. The US went from 9.1% peak in June 2022 to 2.4% in 2026 — this was a disinflation period, not deflation. Stagflation: The most feared combination — high inflation + high unemployment + slow economic growth simultaneously. Most associated with the 1970s US experience (oil embargoes, wage-price spirals). Difficult to fight because the usual anti-inflation tool (raising rates) worsens unemployment.

This calculator uses the official BLS CPI-U annual average data from 1913 to 2025, and the February 2026 monthly CPI for current-year calculations. The CPI-U is the most widely used US inflation measure and the same data used by usinflationcalculator.com, the Minneapolis Fed calculator, and BLS's own inflation calculator. Important limitations: (1) The CPI is a national average — local inflation can differ significantly. (2) Individual spending patterns differ from the CPI basket — if you spend heavily on healthcare (4.1% inflation) vs. driving (gasoline deflating), your personal inflation rate may be higher or lower. (3) The CPI may overstate inflation by 0.5–1.0% due to quality improvements and substitution effects. (4) October 2025 data was interpolated due to the government shutdown. For official verification, use the BLS CPI Inflation Calculator at bls.gov/data/inflation_calculator.htm.