£10,000 in 1971
£124,710.81 in 2020
The inflation rate in United Kingdom between 1971 and 2020 was 1,147.11%, which translates into a total increase of £114,710.81. This means that 10,000 pounds in 1971 are equivalent to 124,710.81 pounds in 2020. In other words, the purchasing power of £10,000 in 1971 equals £124,710.81 in 2020. The average annual inflation rate between these periods was 5.28%.
The following chart depicts the equivalence of £10,000 throughout the years due to inflation and CPI changes. All values are equivalent in terms of purchasing power, which means that for each year the same goods or services could be bought with the indicated amount of money.
All calculations are performed in the local currency (GBP) and using 6 decimal digits. Results show only up to 2 decimal digits to favour readability.
The following table contains relevant indicators:
| Indicator | Value |
|---|---|
| Total Inflation (1971-2020) | 1,147.11% |
| Annual inflation avg. (1971-2020) | 5.28% |
| CPI 1971 | 8.7 |
| CPI 2020 | 108.5 |
| £1 in 1971 | £12.47 in 2020 |
There are several ways to calculate the time value of money. Depending on the data available, results can be obtained by using the compound interest formula or the Consumer Price Index (CPI) formula.
Given that money changes with time as a result of an inflation rate that acts as a compound interest, the following formula can be used: FV = PV (1 + i)n, where:
In this case, the future value represents the final amount obtained after applying the inflation rate to our initial value. In other words, the future value is the amount in 2020 that equals £10,000 in 1971 in terms of purchasing power. There are 49 years between 1971 and 2020 and the average inflation rate was 5.2847%. Therefore, we can resolve the formula like this:
FV = PV (1 + i)n = £10000 * (1 + 0.052847)49 = £124,710.808852 ≈ £124,710.81
When the CPI for both start and end years is known, the following formula can be used:
In this case, the CPI in 1971 was 8.7 and in 2020 was 108.5. Therefore,
| Initial Value | Equivalent value | |
|---|---|---|
| £1 pound in 1971 | £12.47 pounds in 2020 | |
| £5 pounds in 1971 | £62.36 pounds in 2020 | |
| £10 pounds in 1971 | £124.71 pounds in 2020 | |
| £50 pounds in 1971 | £623.55 pounds in 2020 | |
| £100 pounds in 1971 | £1,247.11 pounds in 2020 | |
| £500 pounds in 1971 | £6,235.54 pounds in 2020 | |
| £1,000 pounds in 1971 | £12,471.08 pounds in 2020 | |
| £5,000 pounds in 1971 | £62,355.4 pounds in 2020 | |
| £10,000 pounds in 1971 | £124,710.81 pounds in 2020 | |
| £50,000 pounds in 1971 | £623,554.04 pounds in 2020 | |
| £100,000 pounds in 1971 | £1,247,108.09 pounds in 2020 | |
| £500,000 pounds in 1971 | £6,235,540.44 pounds in 2020 | |
| £1,000,000 pounds in 1971 | £12,471,080.89 pounds in 2020 |
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