Inflation adjustment: CPI less than one

Question

I need help on how to adjust my figures by inflation.

I have two pieces of data. The first one is a company's nominal expenditures during the 2015-2020 period:

2015:$1,177,237
2016:$1,915,074
2017:$1,158,556
2018:$1,730,966
2019:$2,055,497
2020:$2,821,883

I need adjust those figures for inflation. I have the yearly Consumer Price Index with 2018 as the base year.

2015:87.65457
2016:90.12792
2017:95.57296
2018:100
2019:103.90067
2020:107.43

How should I adjust the expenditures to 2018 prices?

Thanks

Make sure you understand what you're doing by adjusting for inflation. Once you understand the intuition, the math will be easy. Since you are adjusting to 2018 dollars, that year will need no adjustment. Years before 2018 will need to be adjusted upwards for inflation, and years after will need to be adjusted downwards. — A. Miller, Apr 25 at 13:35

dm63 · Accepted Answer · 2023-04-25 04:21:54Z

0

You can express each annual expenditure in ‘2018 dollars’ by multiplying the nominal expenditure by 100/the cpi index for the year.

Or you could express the expenditures similarly in any base year dollars by multiplying by base year cpi/ cpi for the year.

answered Apr 25 at 4:21

dm63

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$\begingroup$ Thanks. For the first one, is does it work even for the early years when the CPI is under 1? $\endgroup$
– YouLocalRUser
Apr 25 at 14:40
$\begingroup$ @YouLocalRUser why wouldn't it? That just means the prices were cheaper in that year, than in 2018 $\endgroup$
– user253751
Apr 25 at 15:20

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