Originally Posted by
lunacycle
It looks like your inflation calculator assumes a 3% increase per year. In that case, my 1982 Trek, with handbuilt Reynolds 531 frame, with Suntour and SR components, for which I paid $440 new, would have been equivalent to $440 x (1.03)^26 = $949. That would buy me just the frame with today's money.
It's based on the Consumer Price Index, which is a standard (albeit arguably flawed) measure of price inflation. In that period it averages out pretty close to 3%. However if you run different periods, it can vary dramatically. For example, using the 70's where we had years of double digit inflation produces substantially different results.
http://www.westegg.com/inflation/