You need $66,564.88 salary with equivalent purchasing power in 2010 as compared to $40000 salary in 1990.
The formula to know how much $40,000 would cost to be a salary with equivalent purchasing power in 2010 as compared to 1990,-
Divide the later year CPI by early year CPI and then multiply it by a currency value- (218 / 131) x $40000 = $66,564.88.
In this way, you need $66,564.88 in 2010 as compared to $40000 in 1990.
Purchasing power is the price of a currency conveyed in terms of the number of goods or services that one unit of that currency can buy. It can enfeeble over time due to inflation. That is why increasing prices constructively reduce the number of goods which a consumer can buy. Purchasing power is also known as a buying power of currency.
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