How We Calculate Inflation & Purchasing Power

What is CPI?

The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for a market basket of goods and services. It is the most widely used measure of inflation worldwide. The basket includes food, housing, clothing, transportation, healthcare, recreation, and education.

Different countries maintain their own CPI series. The US Bureau of Labor Statistics (BLS) has published CPI-U data since 1913, with reconstructed historical data going back to 1800 based on commodity price surveys. The Bank of England maintains the most comprehensive historical series, with reliable data back to 1750.

Interpolation Between Data Points

For countries where annual data is sparse (Canada, Japan, France before 1950), RealWorth uses linear interpolation between available data points. This means if we have CPI values for 1920 and 1950, a request for 1935 will use the mathematically interpolated midpoint. This approach is standard practice in historical economics and introduces acceptable uncertainty for educational and informational purposes.

Pre-1913 Data (USA)

Official BLS CPI data begins in 1913. For earlier years, we use the Warren & Pearson Wholesale Price Index, rescaled by Officer & Williamson via MeasuringWorth.com to be consistent with the modern CPI-U series. This is the same approach used by academic economists and is regarded as the best available reconstruction. The Civil War inflation spike (1861–1865) and subsequent Gilded Age deflation are reflected.

Pre-1914 Data (UK)

For pre-1914 UK data, we use the Bank of England "Millennium of Macroeconomic Data" dataset (Broadberry, Campbell, Klein, Overton, van Leeuwen, 2015), supplemented by Clark (2005) "The condition of the working class in England, 1209–2004." This covers Napoleonic War inflation (1800–1815) and the long Victorian deflation through 1896.

Wage Comparisons

Alongside CPI-adjusted values, RealWorth calculates how many weeks or months of average wages a historical sum represented. This "human context" metric often tells a more compelling story than the inflation-adjusted figure alone.

Average wage data comes from the same primary sources as CPI — BLS Current Population Survey (1913+), Census records (pre-1913 USA), Bank of England wage series (UK), and national statistical offices for other countries. Pre-industrial wage data carries wider uncertainty due to the prevalence of in-kind payment and highly variable local wages.

Commodity Prices

The "What You Could Buy" section uses curated historical commodity price data for bread, milk, rent, and gasoline. These prices are sourced from academic research, government statistical publications, and MeasuringWorth.com. Not all commodities have data for all years and countries — items are only shown when reliable data is available.

Data Sources

Full details of all data sources are documented separately. Primary sources include the US Bureau of Labor Statistics, Bank of England Millennium Dataset, Deutsche Bundesbank, INSEE (France), Statistics Canada, Statistics Bureau of Japan, and MeasuringWorth.com.