Between 1914 and 1916, the Consumer Price Index went from 10 to 10.9.
Cumulatively, prices increased 9.0%, which works out to an average of
4.40% per year. Put differently, a dollar in 1914 bought what
$0.92 buys in 1916.
Consumer prices barely moved in 1914, rising just 1.0% for the year, even as
the country’s financial plumbing was rebuilt from the ground up. The Federal
Reserve Banks, created by the Federal Reserve Act signed the previous
December, opened their doors on November 16, giving the U.S. a central bank
for the first time since the 1830s. Weeks earlier, the outbreak of war in
Europe had spooked the New York Stock Exchange into closing for more than
four months, the longest shutdown in its history, as officials worried
European investors would dump American securities for gold. Domestically, the
bigger story was labor: Henry Ford’s decision to pay factory workers $5 a
day, announced in January, roughly doubled wages on his assembly lines and
pushed other manufacturers to raise pay just to keep workers from leaving. A
first-class stamp still cost 2 cents, a price that had held since 1885 and
would keep holding for three more years, even as the war reshaping Europe
began pulling the American economy toward the sustained wartime inflation of
1917.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1914 spending costs in 1916, by category:
Category
Avg. yearly inflation
$100 in 1914 →
All items (CPI-U)
4.40%
$109
Apparel
5.83%
$112
Food
5.25%
$111
Not shown because the BLS began these indexes after 1914: core (all items less food & energy) (1957–), energy (1957–), housing (1967–), medical care (1935–), transportation (1935–), recreation (1993–), education & communication (1993–).
1916 was when World War I first showed up clearly in American price tags.
Consumer prices rose 7.9% for the year, easily the sharpest increase since
the Bureau of Labor Statistics’ CPI history begins in 1913, as factories ran
flat out to fill steel, munitions, and food orders from Britain and France.
Railroad workers felt the squeeze from rising living costs enough to threaten
a nationwide strike; Congress headed it off in September with the Adamson
Act, which set an eight-hour standard workday for interstate rail employees,
the first federal law of its kind covering private-sector hours. Washington
was also preparing more directly for war: the National Defense Act, signed
in June, expanded the Army and National Guard and funded new
government-owned munitions plants, adding another source of demand to an
economy already running hot. Woodrow Wilson won re-election in November
largely on having kept the country out of the fighting so far, a promise
that would not survive the following spring. A first-class stamp still cost
2 cents, one of the few prices that had not yet moved.
MLA: “Inflation from 1914 to 1916: $100 is worth $109 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1914-to-1916/
APA: InflationCalculator.com. Inflation from 1914 to 1916. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1914-to-1916/