$5,000 in 1988

$11,292.97 in 2021

The inflation rate in the United States between 1988 and today has been 125.86%, which translates into a total increase of $6,292.97. This means that **5,000 dollars in 1988 are equivalent to 11,292.97 dollars in 2021**. In other words, the purchasing power of $5,000 in 1988 equals $11,292.97 today. The average annual inflation rate has been 2.43%.

The following chart depicts the equivalence of $5,000 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 (USD) and using 6 decimal digits. Results show only up to 2 decimal digits to favour readability. Inflation data is provided by governments and international institutions on a monthly basis. Today's values were obtained by estimating figures from recent trends.

The following table contains relevant indicators:

Indicator | Value |
---|---|

Total Inflation (1988-2021) | 125.71% |

Total Inflation* | 125.86% |

Annual inflation avg. (1988-2021) | 2.5% |

Annual inflation avg.* | 2.43% |

CPI 1988 | 48.69 |

CPI 2021 | 109.9 |

CPI today* | 109.97 |

$1 in 1988 | $2.26 in 2021 |

* Values extrapolated from the last official data to obtain today's values.

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:

- FV: Future Value
- PV: Present Value
- i: Interest rate (inflation)
- n: Number of times the interest is compounded (i.e. # of years)

In this case, the future value represents the final amount obtained after applying the inflation rate to our initial value. In other words, it indicates how much are $5,000 worth today. There are 33 years between 1988 and 2021 and the average inflation rate has been 2.4252%. Therefore, we can resolve the formula like this:

**FV = PV (1 + i) ^{n} = $5000 * (1 + 0.02)^{33} = $11,285.71**

When the CPI for both start and end years is known, the following formula can be used:

Final value = Initial value *

CPI finalCPI initial

In this case, the CPI in 1988 was 48.69 and the CPI today is 109.97. Therefore,

Final value = Initial value *

CPI finalCPI initial

= $5,000 *
109.948.69

= $11,285.71
Initial Value | Equivalent value | |
---|---|---|

$1 dollar in 1988 | $2.26 dollars today | |

$5 dollars in 1988 | $11.29 dollars today | |

$10 dollars in 1988 | $22.59 dollars today | |

$50 dollars in 1988 | $112.93 dollars today | |

$100 dollars in 1988 | $225.86 dollars today | |

$500 dollars in 1988 | $1,129.3 dollars today | |

$1,000 dollars in 1988 | $2,258.59 dollars today | |

$5,000 dollars in 1988 | $11,292.97 dollars today | |

$10,000 dollars in 1988 | $22,585.93 dollars today | |

$50,000 dollars in 1988 | $112,929.65 dollars today | |

$100,000 dollars in 1988 | $225,859.3 dollars today | |

$500,000 dollars in 1988 | $1,129,296.5 dollars today | |

$1,000,000 dollars in 1988 | $2,258,593 dollars today |

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