Electricity Prices By Year And Adjusted For Inflation

The average cost of electricity per kilowatt hour was 16.6 cents in October from 16.7 cents in September, according to data published Nov. 10, 2022, by the U.S. Labor Department’s Bureau of Labor Statistics (BLS).

In averaging the BLS’s monthly pricing data for electricity by calendar year, the price per kilowatt hour was 14.1 cents in 2021 versus 13.5 cents in 2020, marking a 4.4% increase.

The chart above and table below lists the average annual prices of electricity since 1979 and shows those prices adjusted for inflation in 2021 dollars.

Inflation Adjusted Electricity Prices (1979-2021)

Category: Electricity per kWh

Year Average Electricity Prices by Year* Average Annual CPI for Electricity** Electricity Prices Adjusted for Inflation in 2021 Dollars
1979 $0.050 65.600 $0.171
1980 $0.060 75.800 $0.177
1981 $0.069 87.200 $0.177
1982 $0.076 95.800 $0.178
1983 $0.078 98.900 $0.177
1984 $0.082 105.300 $0.174
1985 $0.081 108.900 $0.167
1986 $0.077 110.400 $0.156
1987 $0.079 110.000 $0.161
1988 $0.080 111.500 $0.161
1989 $0.082 114.700 $0.160
1990 $0.084 117.400 $0.160
1991 $0.087 121.800 $0.160
1992 $0.088 124.200 $0.159
1993 $0.092 126.700 $0.163
1994 $0.092 126.700 $0.163
1995 $0.094 129.600 $0.162
1996 $0.094 131.800 $0.160
1997 $0.094 132.500 $0.159
1998 $0.087 127.400 $0.153
1999 $0.086 126.500 $0.152
2000 $0.087 128.500 $0.152
2001 $0.092 137.800 $0.149
2002 $0.091 136.200 $0.150
2003 $0.093 139.500 $0.149
2004 $0.094 142.100 $0.148
2005 $0.100 150.800 $0.148
2006 $0.112 169.200 $0.148
2007 $0.117 175.825 $0.149
2008 $0.123 187.146 $0.147
2009 $0.127 192.712 $0.148
2010 $0.128 193.095 $0.148
2011 $0.130 196.737 $0.148
2012 $0.130 196.630 $0.148
2013 $0.132 200.750 $0.147
2014 $0.137 208.020 $0.147
2015 $0.138 209.191 $0.148
2016 $0.135 206.983 $0.146
2017 $0.138 211.437 $0.146
2018 $0.136 212.932 $0.143
2019 $0.136 213.362 $0.143
2020 $0.135 214.615 $0.141
2021 $0.141 223.892 $0.141

*Data Source: U.S. Bureau of Labor Statistics: 12-Month Average Electricity per kWh in U.S. city average, average price, not seasonally adjusted. CPI Average Price Data.

**Data Source: U.S. Bureau of Labor Statistics: 12-Month Average Electricity in U.S. city average, all urban consumers, not seasonally adjusted. CPI-All Urban Consumers.

Electricity in the CPI

Electricity is one of the components watched by the BLS for inflation and a part of its Consumer Price Index (CPI). While electricity rates are more stable than prices for companion items like gasoline and fuel oil, the category falls under the BLS’s main "Energy index." Therefore, although electricity costs are used along with many other goods and services in measuring overall inflation, they are completely discounted in calculating core inflation rates.

How are electricity prices affected by inflation? Less so than many other goods and services purchased by American consumers. As an example, the cost of electricity climbed from an average of 8.1 cents per kilowatt hour in 1985 to 13.5 cents in 2020, marking a 66.7% rate of increase in 35 years. That’s a sizable gain but, interestingly, plugging 8.1 cents and the two years into this site’s Inflation Calculator finds that electricity prices during the time increased slower than the rate of overall inflation. The often-reported overall inflation rate is calculated from measuring pricing changes over thousands of items — not just electricity rates. Overall inflation places 8.1 cents in 1985 at 19 cents in 2020 for a 140.5% rate increase.

How to Adjust Electricity Prices for Inflation

In calculating electricity prices for inflation adjustment, we’ll use an example that shows how to adjust them from 1979 to 2021. First, consider these facts which are shown in the table above:

  • The average price for Electricity in 1979 was $0.050 per kilowatt hour.
  • The annual average CPI for Electricity in 1979 was 65.600.
  • The annual average CPI for Electricity in 2021 was 223.892.

The following formula shows how to adjust gasoline for inflation:

1979 Electricity Price x (2021 CPI for Electricity / 1979 CPI for Electricity) = Adjusted Electricity Price in 2021 Dollars

Using the actual numbers:

$0.050 x (223.892/65.600) = 17.1 cents per kWh