According to the Los Angeles Times, prices only rose by 1.1% in 1986, which was the lowest increase in 25 years. Unemployment rates were also beginning to decrease according to data from Consumer Affairs. To get a clearer picture of the day-to-day finances of households during this time in history, let’s dive into the cost of living in 1986.
The Cost of Living in 1986
The prices Americans paid for necessary goods and services in the eighties may seem very cheap to us today. For example, a gallon of gas cost roughly a dollar, which would make anyone filling up now green with envy! However, you have to remember that Americans also earned much less back then.
According to The People History, the average salary in 1986 was roughly $24,500 per year. In 2024, the average salary is about $61,900 per MarketWatch. So as you review the prices below, keep in mind that Americans had a lot less income to budget with in the eighties.
Cost of Groceries
According to the BLS, the average person spent roughly $2,000 per year on groceries in 1986. If you include restaurant meals and takeout, total food expenses added up to nearly $3,500 per year. Considering the average salary was only $24,500, food ate up a pretty big portion of the household budget. To get a better idea of the cost of groceries in 1986, check out the average prices of various food staples below.
Item | 1986 | |
| Ground Beef | $1.23/lb | $5.13/lb |
| Pork Chops | $2.59/lb | $4.25/lb |
| Tomatoes | $0.82/lb | $2.04/lb |
| Sugar | $0.35/lb | $1.00/lb |
| Dozen Eggs | $0.87 | $2.52 |
| Chicken | $1.85/lb | $4.06/lb |
| Sirloin Steak | $2.96/lb | $13.70/lb |
| Potatoes | $0.24/lb | $0.89/lb |
| Gallon of Milk | $2.22 | $3.89 |
| Bacon | $2.08/lb | $6.60/lb |
| Coffee | $3.43/lb | $6.06/lb |
| Ham | $1.06/lb | $4.88/lb |
| Lettuce | $0.53 | $2.84 |
| Bananas | $0.38/lb | $0.62/lb |
Cost of Major Purchases
Major purchases like homes were difficult for some to afford during the 70s and 80s due to high interest rates. Luckily the cost of living in 1986 was becoming more manageable thanks to falling interest rates. In January, they started off at 9.125%. But at the end of the year, they fell to 7.375% according to the SSA, providing a bit of financial relief.
Still, interest rates were nowhere near the lows we enjoyed in 2021. So Americans had to save up to afford big-ticket items like homes, cars, and college tuition. Take a look at the average prices of major purchases below to get a better idea of the cost of living in 1986.
Item | 1980s |
| Gallon of Gas | $1.04 |
| New Car | $16,000 |
| New Home | $102,905 |
| Median Monthly Rent | $300 |
| Public College Tuition | $1,000 per year |
Cost of Entertainment
The cost of living in 1986 began to ease up due to falling inflation rates. This gave Americans a bit of disposable income to spend on entertainment. According to the BLS, the average American spent roughly $1,150 per year on luxuries like televisions, radios, and toys.
The debut of MTV led music to become a big part of American culture throughout the eighties. People enjoyed going to concerts and listening to music on the TV and radio. Watching movies was another popular pastime, with major hits like Top Gun and Ferris Bueller’s Day Off coming to theaters in 1986. Families also bonded over watching movies at home on VHS.
Item | 1980s |
| Barbie Doll | $9.99 |
| CD | $14.99 |
| Raiders of the Lost Ark VHS | $24.95 |
| Mighty Diamonds Concert Ticket | $7.50 |
| Adult Ticket to Disney World | $26.00 |
What do you think about the cost of living in 1986 compared to today? Do you think it was harder or easier to afford necessities back then? Share your thoughts in the comments!
Read More
What Was The Cost of Living In 1990?
What Was The Cost of Living in 1980?
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.