Stats › Long run returns › Inflation
Inflation and stock returns
Inflation is just the rate at which money buys less than it used to. It gets measured with a fixed basket of goods and services, and the annual rate is how much the cost of that basket changed over twelve months. Nothing complicated about the idea itself. What it does to investment returns is where it gets interesting, because almost every return figure you'll ever be quoted quietly ignores it, and the ones that don't are the ones worth trusting.
The S&P 500's long run return since 1928 is 9.79% a year. That's the number everyone uses. After inflation it's about 6.9%, so roughly three percentage points a year of that headline just held your purchasing power steady rather than making you better off. Nearly a third of the return, gone to standing still, and it's almost never mentioned.
This page has the annual US inflation record, the recent cycle from 1.2% in 2020 up to 8.0% in 2022 and back down, the extremes at both ends, and a section on the claim that shares protect you from inflation. That last one deserves a careful look, because it's true over decades and it was not true in 2022. Two sources, both linked at the bottom with their date ranges, one for the CPI series and one for the return figures. I'd rather you check them than trust me.
US inflation peaked at 17.4% in 1917 and bottomed at -10.5% in 1921, both within four years of each other. The recent cycle ran from 1.2% in 2020 to 8.0% in 2022 and back to 2.6% in 2025, with 2026 running at 3.5% through June. Inflation is what turns the S&P 500's nominal 9.79% annual return into roughly 6.9% in purchasing power, and that roughly three point gap is the single largest adjustment applied to any long run return figure.
Members only
The rest of this page is for members
Below this point there are 7 sections, 1 chart and 2 named sources, roughly 1150 words of it. Every figure carries the source it came from and the date the data is from.
You can keep browsing every statistic in the library for free. The intro and the summary are always open.