Between 1914 and 1928, the Consumer Price Index went from 10 to 17.1.
Cumulatively, prices increased 71.0%, which works out to an average of
3.91% per year. Put differently, a dollar in 1914 bought what
$0.58 buys in 1928.
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 1928, by category:
Category
Avg. yearly inflation
$100 in 1914 →
All items (CPI-U)
3.91%
$171
Apparel
3.72%
$167
Food
3.41%
$160
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 1928, the second straight year of mild decline
even as the stock market climbed sharply, a widening gap between asset
prices and the cost of living that later economists pointed to as an early
warning sign. The Federal Reserve tightened policy repeatedly over the year,
raising its discount rate in an effort to slow the flood of borrowed money
pouring into stock purchases without derailing the broader economy, a
balancing act it ultimately failed to manage. Herbert Hoover won the
presidential election that November, defeating Democrat Al Smith on a
platform built around continuing the prosperity of the Coolidge years; few
voters or policymakers anticipated how quickly that prosperity would end.
First-class postage remained at 2 cents, a price that had now held for nine
straight years.
MLA: “Inflation from 1914 to 1928: $100 is worth $171 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1914-to-1928/
APA: InflationCalculator.com. Inflation from 1914 to 1928. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1914-to-1928/