According to the United States Bureau of Labor Statistics, the Consumer Price Index (CPI) for 1920 was 17.3, while the CPI for January 2023 was 299.16. The CPI is a measure of the average price level of a basket of goods and services. Using this information, we can calculate the inflation rate between 1920 and 2023:
Inflation rate = [(CPI for 2023 – CPI for 1920) / CPI for 1920] x 100
Inflation rate = [(299.16 – 17.3) / 17.3] x 100
Inflation rate = 1,628.61%
This means that the price level of goods and services has increased by approximately 1,628.61% between 1920 and January 2023.
To determine the value of a dollar in 1920 compared to today, we need to divide $1 by the inflation rate expressed as a decimal:
Value of $1 in 1920 today = $1 / (1 + Inflation rate)
Value of $1 in 1920 today = $1 / (1 + 16.2861)
Value of $1 in 1920 today = $1 / 17.2861
Value of $1 in 1920 today = $0.058
Therefore, a dollar in 1920 would be worth approximately $0.058 in terms of today's value, considering the change in the CPI between 1920 and January 2023.