U.S. Inflation Rate by Year: 1929 - 2018

How Bad Is Inflation? Past, Present, Future

boat yard during world war II
The U.S. experienced extremely high inflation rates during World War II. The U.S. National Archives and Records Administration

The U.S. inflation rate by year is the percent change in prices from one year to the next, or year-over-year.  It changes with 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, it creates asset bubbles. The second phase is the peak. That's the month when expansion ends and contraction begins.

 The third phase is contraction, which is a recession. Inflation falls below 2.0 percent. Soon, deflation becomes a threat. The fourth phase is the trough. That's the month when contraction ends and expansion begins.

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 major events influencing inflation. For more about the forecast, see U.S. Economic Outlook.

YearInflation Rate YOYFed Funds RateBusiness Cycle (GDP Growth)     Events Affecting Inflation
19290.6%NAAug peakMarket crash
1930-6.4%NAContraction (-8.5%)Smoot-Hawley
1931-9.3%NAContraction (-6.4%)Dust Bowl
1932-10.3%NAContraction (-12.9%)Hoover tax hikes
19330.8%NAContraction ended in March. (-1.3%)FDR's New Deal
19341.5%NAExpansion (10.8%)U.S. debt rose
19353.0%NAExpansion (8.9%)Social Security
19361.4%NAExpansion (12.9%)FDR tax hikes
19372.9%NAExpansion peaked in May (5.1%)Depression resumes
1938-2.8%NAContraction ended in June (-3.3%)Depression ended
19390.0%NAExpansion (8.0%)Dust Bowl ended
19400.7%NAExpansion (8.8%)Defense increased
19419.9%NAExpansion (17.7%)Pearl Harbor
19429.0%NAExpansion (18.9%)Defense spending tripled
19433.0%NAExpansion (17.0%)
19442.3%NAExpansion (8.0%)Bretton-Woods
19452.2%NAFeb peak.Oct trough (-1.0%)Truman ended WWII
194618.1%NAExpansion (-11.3%)Budget cuts
19478.8%NAExpansion (-1.1%) Marshall Plan.Truman Doctrine. Cold War
19483.0%NANov peak (4.1%) 
1949-2.1%NAOct trough (-0.5%)Fair Deal. NATO
19505.9%NAExpansion (8.7%) Korean War
19516.0%NAExpansion (8.1%)  
19520.8%NAExpansion (4.1%) 
19530.7%NAJuly peak (4.7%)Eisenhower ended Korean War
1954-0.7%1.25%May trough (-0.6%)Dow returned to 1929 high
19550.4%2.50%Expansion (7.1%) 
19563.0%3.00%Expansion (2.1%)  
19572.9%3.00%Aug peak (2.1%)Recession
19581.8%2.50%April trough (-0.7%)Recession ended
19591.7%4.00%Expansion (6.9%)Fed raised rates
19601.4%2.00%April peak (2.6%)Recession
19610.7%2.00%Feb trough (2.6%)JFK's deficit spending ended recession
19621.3%3.00%Expansion (6.1%) 
19631.6%3.38%Expansion (4.4%) 
19641.0%3.75%Expansion (5.8%) LBJ's Medicare, Medicaid
19651.9%4.25%Expansion (6.5%) 
19663.5%5.50%Expansion (6.6%)Vietnam War
19673.0%4.50%Expansion (2.7%) 
19684.7%6.00%Expansion (4.9%)Moon landing
19696.2%9.00%Dec peak (3.1%)Nixon took office
19705.6%5.00%Nov trough (0.2%) Recession
19713.3%5.00%Expansion (3.3%) Wage-price controls
19723.4%5.75%Expansion (5.2%)Stagflation
19738.7%11.00%Nov peak (5.6%)End of gold standard
197412.3%8.00%Contraction (-0.5%) Watergate
19756.9%6.50%March trough (-0.2%)Stop-gap monetary policy. Fed raised rates to fight inflation, then lowered them to fight recession. Confused businesses kept prices high.
19764.9%4.75%Expansion (5.4%) 
19776.7%6.50%Expansion (4.6%) 
19789.0%10.00%Expansion (5.6%) 
197913.3%12.00%Expansion (3.2%)  
198012.5%18.00%Jan peak (0.2%)Recession
19818.9%12.00%July trough (2.6%)Reagan tax cut
19823.8%8.50%November (-1.9%) Recession ended
19833.8%9.25%Expansion (4.6%) Reagan increased military spending
19843.9%8.25%Expansion (7.3%)
19853.8%7.75%Expansion (4.2%) 
19861.1%6.00%Expansion (3.5%) Tax cut
19874.4%6.75%Expansion (3.5%) Black Monday crash
19884.4%9.75%Expansion (4.2%)Fed raised rates
19894.6%8.25%Expansion (3.7%)  S&L Crisis 
19906.1%7.00%Jul peak (1.9%) Recession
19913.1%4.00%Mar trough (-0.1%) Fed lowered rate
19922.9%3.00%Expansion (3.6%)NAFTA drafted
19932.7%3.00%Expansion (2.7%) Balanced Budget Act
19942.7%5.50%Expansion (4.0%) 
19952.5%5.50%Expansion (2.7%) 
19963.3%5.25%Expansion (3.8%)Welfare reform
19971.7%5.50%Expansion (4.5%)Fed raised rate
19981.6%4.75%Expansion (4.5%)LTCM crisis
19992.7%5.50%Expansion (4.7%)Glass-Steagall repealed
20003.4%6.50%Expansion (4.1%)Tech bubble burst
20011.6%1.75%March peak. Nov trough. (1.0%)Bush tax cut. 9/11 attacks
20022.4%1.25%Expansion (1.8%) War on Terror
20031.9%1.00%Expansion (2.8%)JGTRRA
20043.3%2.25%Expansion (3.8%) 
20053.4%4.25%Expansion (3.3%)Katrina. Bankruptcy Act
20062.5%5.25%Expansion (2.7%) Bernanke is Fed Chair
20074.1%4.25%Dec peak (1.8%)Bank crisis
20080.1%0%Contraction (-.3%)Financial crisis
20092.7%0%Jun trough (2.8%) ARRA
20101.5%0%Expansion (2.5%)ACA. Dodd-Frank
20113.0%0%Expansion (1.6%)Debt ceiling crisis
20121.7%0%Expansion (2.2%) 
20131.5%0%Expansion (1.7%)Government shutdown. Sequestration
20140.8%0%Expansion (2.4%)QE ends
20150.7%.25%Expansion (2.6%) Deflation in oil and gas prices
20162.1%.75%Expansion (1.6%) 
20171.6%1.4%Forecast. Core inflation rate 1.7%. The current rate is updated monthly.
20182.0%2.1%Forecast. Core rate 2.0 %
20192.0%2.9%Forecast. Core rate 2.0%

 

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.

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