Calculating InflationAdjusted Figures
It is common for someone to want to know if his/her annual pay is keeping pace with inflation from yeartoyear. An explanation of the calculation of inflation adjusted figures follows, but first listed are some of the assumptions one accept when using the U.S. Consumer Price Index for all Urban consumers (CPIU) to prepare these estimates. Remember that changes in the CPIU depict the U.S. average change in the cost of living for urban consumers.
Assumptions

Because varying economic cycles in different areas, the CPIU may not necessarily fit an area in the shortrun; but for Utah over the longrun, the use of the CPIU seems appropriate.

The CPIU may not necessarily represent the inflation patterns of individual budgets that may be more closely related to specific costs, such as fuel or medical supplies.
Two Alternatives
There are two different approaches to calculating inflation adjusted figures: (1) State the series in terms of most recent year's dollars, or (2) Use the beginning year of the series as the reference point. The U.S. Bureau of the Census uses the first approach to present ant compare median income figures for the past several years. The second approach is useful in determining if, for example, average or individual wages are keeping pace with inflation.
Reference = Most Recent Year
 From a table of CPIU annual averages, calculate the change between the most recent year and a preceding year (divide the newer year by the older year).
 Then multiply the unadjusted number for that year by the ratio just calculated.
Example: U.S. Capita Money Income
Current  CPIU  Ratio  1992 $  

1992  $15,033  140.3  1.000  $15,033 
1985  $11,013  107.6  1.304  $14,360 
Reference = Beginning Year
 Calculate the relative change in the CPIU annual averages for succeeding years compared to that year.
 That is, divide the later year by the earlier year and post the ratio.If intervening years are not needed, merely calculate the single ratio.
 Then divide the unadjusted number for the year by the ratio for that year.
Example: Utah Average Monthly Wage
Current  CPIU  Ratio  1985 $  

1992  $1,801  140.3  1.304  $1,381 
1985  $1,440  107.6  1.000  $1,440 
You may direct any questions to the Senior Economist, Mark Knold, at (801) 5269458.
Source: Utah Department of Workforce Services, Workforce Research and Analysis Division.