On this page is a daily inflation calculator for the United States. It uses Consumer Price Index data from the BLS from 1913 until the present day, and interpolates or extrapolates to give daily estimates.
You can enter a starting amount and we'll estimate how much it would take on the ending date to match the same purchasing power.
A Slow Devaluation
If you have seen a graph of inflation over the last century or so, you'll note that it wasn't until the post-World War II era that we started to see relatively predictable levels of inflation in the economy.
We've seen a slow decline in the purchasing power of fixed dollar amounts over the last 80 or so years (Graph through April 1, 2013):
A low but stable level of inflation is roughly the ideal path to chart for the success of an economy. Inflation is a 'call to action' - a catalyst, if you will, in order to get people to mobilize their money productively. In a deflationary period, the value of currency increases - and things start to work in reverse. If value is moving in reverse, why buy non-necessities? They will cost less in real money tomorrow. If banks react by paying negative interest rates, why bother investing? You can 'make money' by hiding your cash in the backyard.
Truth is, economic policy as we know it works with a policy of steadily increasing inflation, but not so much in a deflationary spiral. Witness the Great Depression - many Economists have argued that the deflationary spiral created by the money supply's contraction worsened the whole episode (and can be seen in the graph above as the sudden spike in the 1920s). Even noted libertarian Nobel Prize winner Milton Friedman notes the inflexibility in the gold standard (and the inability of the Fed to ease) made the Great Depression worse.
Monetary policy has come a long way - and countries today practice a policy known as 'inflation targeting' - they literally not only aim internally for specific inflation numbers, but also publish their goals publicly. We've even crossed the rubicon at this point, and some central banks have gone to negative interest rates
Methodology for the Daily Inflation Calculator
The daily inflation calculator automatically polls the St. Louis Fed's FRED database (at midnight, EST) and downloads CPI-U, non inflation adjusted monthly. It saves it as XML on the DQYDJ servers.
We apply some simple math to figure out the change in the value of money between two dates. Assuming you enter valid dates, first it finds the two months buffering the date you pick. If it can't find one, it uses linear extrapolation from the last two entries to predict a daily CPI index. It uses the last few months when extrapolating, and the two buffering months when interpolating - unless you choose the first of a month (which we then use directly from the BLS)