2

I want to calculate worth of money N years ago. Based on this post, it can be calculated using CPI, but I want to use given inflation value N years ago. It better if I can get reference(s) of formula to calculate this.

Edit 1

This example explain what N years ago mean is.

I want to know worth of money 5 years ago (2012) if inflation that year is 4% with money price this year (2017) is $1000.

Based on this example, I have inflation and this year price variables. So I can't use CPI formula in the post mentioned.

Edit 2

I'm sorry with my wording in main post

Based on this post, it can be calculated using CPI, but I want to use given inflation value N years ago.

as if I want to calculate it using CPI and wording in Edit 1 as if I ask different question. Likely the words I type not thoroughly what I means.

I want to calculate money price each previous years NOT based on CPI but using inflation value like data below:

Year    Inflation       Price
2017    -               75,000,000.00
2016    5%              ?
2015    4.5%            ?
2014    3%              ?
2013    5%              ?
...
...
1976    3.8%            ?

I want to know the formula and it better if I can get reference(s) of formula because it will be used in academic research.

4

From your linked article -

The CPI for 1950 = 24.1
The CPI for 2017 = 244.73*

Use the following formula to compute the calculation:

1950 Price = 2017 Price x (1950 CPI / 2017 CPI*)
$0.69 = $7.00 x (24.1 / 244.7)

You need the CPI for the 2 years you want to compare and then multiply by the amount of money you wish to compare.

There really is no "N". Inflation is different each year, unlike, say, a fixed rate interest rate, then (1+r)^N applies.

Note: the question has been radically edited.

My newer response is that each year creates a new divisor, e.g. to get 2016, divide by 1.05, then divide by 1.045 to go to 2015, etc. You need to divide by the product of all the factors, where an interest of 5% is a divisor of 1.05, for example.

  • I edit my post with example eddition. I can't use CPI formula in the post I mentioned. – Eko Subha Dec 15 '17 at 22:18
  • You are saying "that year" but 5 years have passed. Divide by (1.04)^5 if you just want to see effect of 4%/yr for 5 years. – JTP - Apologise to Monica Dec 15 '17 at 22:23
  • So, did you mean the formula is 2012 price = 2017 price/((1+r)^N) ? – Eko Subha Dec 16 '17 at 6:49
  • I'm saying that you asked a question based on CPI which is different for each year, and comparisons between 2 years is a simple ratio. Then you edited and asked what is a different question, not suitable to CPI, but to the theoretical "if inflation were the same exact 4% for N years, how do I do the math?" A valid, but different question. – JTP - Apologise to Monica Dec 16 '17 at 12:09
  • I'm sorry with my wording. I Edit it again, please check it. – Eko Subha Dec 16 '17 at 19:03
0

The US Bureau of Labor Statistics provides a consumer inflation calculator, which is useful if you just want to do a few conversions. You select a date to convert from and a date to convert to, enter an amount, and it gives you an adjusted amount. You can find it at: https://data.bls.gov/cgi-bin/cpicalc.pl

If you want to do a lot of conversions, then you will want to download the time series of CPI values. You can get that from the St. Louis Fed: https://fred.stlouisfed.org/series/CPIAUCSL (The link goes to a chart, but there is a button to download the raw data in the top-right of the page.)

To use these values, find the value of the index for the date you want to convert to, divide it by the index for the date you want to convert from and multiply by the dollar value.

  • I need to calculate it manually and not based on CPI. I've edited my question, please check. – Eko Subha Dec 16 '17 at 19:05
  • If you want to calculate it manually, you will have to find out what the inflation rate was in each year, which is not a trivial task. Not only is it not constant from year to year, it is not constant within a year. Probably the best way to get the data you need is to back it out of the CPI figures, but even then it won't be easy. Why are you trying to do it this way? What are you actually trying to accomplish? – Nobody Dec 19 '17 at 22:45
  • Yes, probably CPI figures are the best way. But right now I don't have CPI data but inflation rate data from 1976 to 2016 does. I want to know money price from 1976 to 2016 in my country. So I need to calculate the money price using formula that contain inflation rate, but I don't know the formula is. – Eko Subha Dec 20 '17 at 3:23

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.