Consumer Price Index (CPI) Evolution
The left chart shows the absolute CPI value from 1950 to present. The CPI is set to 100 for the base period (1982-1984).
- 1950 CPI ≈ 24: Prices were about 76% lower than the 1982-1984 baseline
- 2024 CPI ≈ 310+: Prices are about 210% higher than the baseline
- Exponential Growth: Reflects compounding inflation over decades
Cumulative Inflation Since 1950
The right chart displays the total percentage increase in prices since 1950.
- Shows the total erosion of purchasing power over time
- By 2024, cumulative inflation is typically 1,200%+
- This means $1 in 1950 has the same purchasing power as $13+ today
Key Insights
- Steady vs. Volatile Periods: Notice steeper slopes during high-inflation periods (1970s)
- Compounding Effect: Even low inflation (2-3%) accumulates significantly over decades
- Structural Inflation: Modern economies typically experience persistent positive inflation
Investment Implications
To preserve purchasing power, investments must generate returns above the inflation rate. A 7% return in a 3% inflation environment yields a real return of 4%.