$40,165 in 1965 has the same purchasing power as $166,652.87 in 1990. Over the 25 years this is a change of $126,487.87.

The average inflation rate of the dollar between 1965 and 1990 was 5.73% per year. The cumulative price increase of the dollar over this time was 314.92%.

## The value of $40,165 from 1965 to 1990

So what does this data mean? It means that the prices in 1990 are 1,666.53 higher than the average prices since 1965. A dollar in 1990 can buy 24.10% of what it could buy in 1965.

These inflation figures use the Bureau of Labor Statistics (BLS) consumer price index to calculate the value of $40,165 between 1965 and 1990.

The inflation rate for 1965 was 1.61%, while the inflation rate for 1990 was 5.40%. The 1990 inflation rate is higher than the average inflation rate of 3.93% per year between 1990 and 2021.

## USD Inflation Since 1913

The chart below shows the inflation rate from 1913 when the Bureau of Labor Statistics' Consumer Price Index (CPI) was first established.

## The Buying Power of $40,165 in 1965

We can look at the buying power equivalent for $40,165 in 1965 to see how much you would need to adjust for in order to beat inflation. For 1965 to 1990, if you started with $40,165 in 1965, you would need to have $166,652.87 in 1965 to keep up with inflation rates.

So if we are saying that $40,165 is equivalent to $166,652.87 over time, you can see the core concept of inflation in action. The "real value" of a single dollar decreases over time. It will pay for fewer items at the store than it did previously.

In the chart below you can see how the value of the dollar is worth less over 25 years.

## Value of $40,165 Over Time

In the table below we can see the value of the US Dollar over time. According to the BLS, each of these amounts are equivalent in terms of what that amount could purchase at the time.

## US Dollar Inflation Conversion

If you're interested to see the effect of inflation on various 1950 amounts, the table below shows how much each amount would be worth today based on the price increase of 314.92%.

## Calculate Inflation Rate for $40,165 from 1965 to 1990

To calculate the inflation rate of $40,165 from 1965 to 1990, we use the following formula:

$$\dfrac{ 1965\; USD\; value \times CPI\; in\; 1990 }{ CPI\; in\; 1965 } = 1990\; USD\; value $$

We then replace the variables with the historical CPI values. The CPI in 1965 was 31.5 and 130.7 in 1990.

$$\dfrac{ \$40,165 \times 130.7 }{ 31.5 } = \text{ \$166,652.87 } $$

$40,165 in 1965 has the same purchasing power as $166,652.87 in 1990.

To work out the total inflation rate for the 25 years between 1965 and 1990, we can use a different formula:

$$ \dfrac{\text{CPI in 1990 } - \text{ CPI in 1965 } }{\text{CPI in 1965 }} \times 100 = \text{Cumulative rate for 25 years} $$

Again, we can replace those variables with the correct Consumer Price Index values to work out the cumulativate rate:

$$ \dfrac{\text{ 130.7 } - \text{ 31.5 } }{\text{ 31.5 }} \times 100 = \text{ 314.92\% } $$

## Inflation Rate Definition

The inflation rate is the percentage increase in the average level of prices of a basket of selected goods over time. It indicates a decrease in the purchasing power of currency and results in an increased consumer price index (CPI). Put simply, the inflation rate is the rate at which the general prices of consumer goods increases when the currency purchase power is falling.

The most common cause of inflation is an increase in the money supply, though it can be caused by many different circumstances and events. The value of the floating currency starts to decline when it becomes abundant. What this means is that the currency is not as scarce and, as a result, not as valuable.

By comparing a list of standard products (the CPI), the change in price over time will be measured by the inflation rate. The prices of products such as milk, bread, and gas will be tracked over time after they are grouped together. Inflation shows that the money used to buy these products is not worth as much as it used to be when there is an increase in these products’ prices over time.

The inflation rate is basically the rate at which money loses its value when compared to the basket of selected goods – which is a fixed set of consumer products and services that are valued on an annual basis.