1What a dollar was worth

Pick an amount and two years to see what it takes to buy the same things. This uses the Consumer Price Index, the government's measure of what a typical city household pays for food, housing, gas, health care and the rest.

Your own inflation can differ from the index: it depends on what you buy, where you live, and whether you rent or own. 2025 is the latest full year.

2Does more money mean higher prices?

The money supply here is M2: cash plus checking, savings and money market balances. It grows when banks lend and when the Federal Reserve buys bonds. In 2020 it grew faster than in any year since at least 1960, and inflation peaked in 2022. Coincidence, or cause? Slide the gap to line money growth up with inflation a year or two later.

Both are December to December: how much money and prices grew during each year. The correlation runs from 1 (move together perfectly) to 0 (no relationship).

3Why the link is loose

More money only pushes up prices if it gets spent faster than the economy can make more things. Economists sum this up in one line:

money × how often it's spent = prices × what the economy makes

"How often it's spent" is called velocity: a year's spending (GDP) divided by the money supply. When people and banks hold on to money instead of spending it, velocity falls, and a lot of new money can arrive with little inflation. That's what happened after 2008. In 2020 velocity collapsed, then recovered as spending came back, and prices followed.

Decade by decade

Average yearly change. Money growth, minus growth in what the economy makes (output), plus the change in velocity, comes out close to inflation. It won't match exactly, because the Consumer Price Index measures a household's basket, not every price in the economy.

Sources

• Prices: Consumer Price Index for All Urban Consumers (CPI-U), all items, U.S. city average, not seasonally adjusted, from the Bureau of Labor Statistics. Section 1 uses annual averages (1913 to 2025); section 2 uses December to December changes.
• Money supply: M2, seasonally adjusted, from the Federal Reserve (FRED: M2SL), December of each year.
• Velocity: nominal GDP divided by M2 (FRED: M2V), averaged over each year's four quarters.
• What the economy makes: real GDP in chained 2017 dollars, from the Bureau of Economic Analysis (FRED: GDPCA).
• Money, velocity and output cover 1960 to 2025. Data as of October 2026.

For education only, not investment, tax or legal advice. Past inflation says nothing certain about future inflation.