An out of home exec needs to keep track of inflation for three reasons.

• Inflation tells you how fast to increase ad rates to avoid having your margins squeezed.  Inflation is currently 3.4%.  If you are not increasing your ad rates 3.4%/year your expenses will increase faster than your revenues which will reduce your cashflow.
• Inflation tells you what sort of lease inflators out of home landlords will ask for.
• Inflation helps you to set a limits on out of home lease inflators.  An out of home lease written with a 5%/year inflator in 2003 would have grown at twice the rate of inflation and would have probably become economically infeasible by 2020.  A lease is a long term document so focus on long term trends in setting lease inflators.

Here’s a summary of inflation for the 1, 5, 10 and 20 years.

US Inflation Rates (source: US Inflation Calculator)

Last Year (2023):  4.1%

Last 5 Years (2018-2023):  3.96%

Last 10 Years (2014-2023): 2.73%

Last 20 Years (2004-2023): 2.56%

And here’s the monthly and yearly data since 2000.

To keep track of inflation trends bookmark US Inflation Calculator.  That’s the site we took this data from.

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