U.S. Inflation Rate by Year from 1929 to 2020

The U.S. inflation rate by year is the percent change in prices from one year to the next, or year-over-year.  

The inflation rate responds to each phase of the business cycle. The first phase is expansion. That's when growth is positive, with healthy 2 percent inflation. As the economy expands beyond 3 percent growth, it creates asset bubbles. It creates the second phase, which is the peak. That's the month when expansion ends and contraction begins.

Inflation will rise to 3 percent or more.

The third phase is contraction, which is a recession. Inflation falls below 2 percent. During a recession, deflation becomes a threat. The inflation rate falls into negative territory. The fourth phase is the trough. That's the month when contraction ends and expansion begins. After that phase, inflation turns positive again. 

Inflation also responds to monetary policy enacted by the Federal Reserve. The Fed focuses on the core inflation rate because it excludes volatile gas and food prices. The Fed sets a target inflation rate of two percent. If the core rate rises much above that, the Fed will execute contractionary monetary policy. This increases interest rates, shutting down demand and forcing prices lower.

U.S. Inflation Rate History and Forecast

The table below compares the inflation rate with the fed funds rate, the phase of the business cycle and the significant events influencing inflation.

The most recent forecast is in the "U.S. Economic Outlook."

Resources for Table

• BLS, Historical Inflation Rate
• U.S. Census Bureau, Percent of Population That Is Unemployed 1929-1947 Note: This divides the number of people age 14 and over without jobs into the total civilian population.
• BLS, Unemployment Rate 1948-2015 Note: This divides the number of unemployed who are actively looking for work into the labor force.
• Historical Targeted Fed Funds Rate
• Effective Fed Funds Rate: St. Louis Federal Reserve (Used to estimate targeted Fed funds rate before 1971.)
• Recession History
• History of Gold Standard
• NBER, Business Cycle Dates
• BEA, National Income, and Product Accounts Tables: Table 1.1.1. GDP Growth Rate
• The Fed uses complex computer models to create its forecasts. But so many variables change in between estimates that it's difficult to be precise three years out. The critical thing to recognize is that the Fed doesn't think inflation will be a credible threat any time soon. (Source: "Economic Projections of Federal Reserve," The Federal Reserve, June 14, 2017.)

More History

• National Debt by Year
• Deficit by Year
• U.S. GDP by Year
• GDP Growth by Year
• Unemployment Rate by Year
• Gold Prices by Year