Between 1914 and 1927, the Consumer Price Index went from 10 to 17.4.
Cumulatively, prices increased 74.0%, which works out to an average of
4.35% per year. Put differently, a dollar in 1914 bought what
$0.57 buys in 1927.
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 1927, by category:
Category
Avg. yearly inflation
$100 in 1914 →
All items (CPI-U)
4.35%
$174
Apparel
4.10%
$169
Food
3.72%
$161
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–).
Consumer prices fell 1.7% in 1927, a mild retreat after three years of
gradual increases and part of a shallow up-and-down pattern that ran through
the second half of the decade. Aviation delivered the year’s signature
moment: Charles Lindbergh departed Roosevelt Field, New York, on May 20 and
landed at Le Bourget Field outside Paris roughly 33.5 hours later, the first
person to fly the Atlantic solo and nonstop. Detroit closed a chapter of its
own that May, when Ford halted the Model T’s production line after nearly 19
years and more than 15 million cars sold, idling tens of thousands of
workers while its factories retooled for the Model A. The Federal Reserve,
meeting with European central bankers that summer, cut its discount rate to
ease pressure on currencies still recovering from the war, a move later
cited by economists including Milton Friedman and Anna Schwartz as fuel for
the stock market speculation that built through the following two years.
First-class postage held at 2 cents.
MLA: “Inflation from 1914 to 1927: $100 is worth $174 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1914-to-1927/
APA: InflationCalculator.com. Inflation from 1914 to 1927. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1914-to-1927/