Value of $100 in 1917, adjusted to 1918

What happened to prices between 1917 and 1918

Between 1917 and 1918, the Consumer Price Index went from 12.8 to 15.1. Cumulatively, prices increased 18.0%, which works out to an average of 17.97% per year. Put differently, a dollar in 1917 bought what $0.85 buys in 1918.

1917 is when World War I inflation stopped being a background trend and became the dominant fact of American economic life. Consumer prices rose 17.4% for the year, more than double the previous year’s already sharp increase, as the country’s April 6 entry into the war layered federal war spending on top of an economy already strained by military demand and worker shortages. Congress paid for the war with the War Revenue Act that October, which sharply raised income taxes, created a new tax on wartime business profits, and, in a small but very visible change for ordinary households, raised the cost of a first-class stamp from 2 cents to 3 cents that November, the rate’s first move since 1885. Herbert Hoover took over the new Food Administration in August and asked Americans to conserve food voluntarily rather than face formal rationing, a campaign that became famous enough that “Hooverize” entered the language as a verb for cutting back. None of it slowed prices much: the 17.4% increase would be topped again the very next year, in 1918.

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The destination year: 1918

1918 brought the steepest annual price increase the CPI had recorded: consumer prices rose 18.0% for the year, edging out 1917’s already sharp 17.4% as the economy stayed at full wartime mobilization for most of the year. A first-class stamp cost 3 cents, up from 2 cents the previous November under the War Revenue Act’s wartime tax increases. The war itself ended on November 11, when Germany signed an armistice with the Allied powers after more than four years of fighting in Europe, but the inflation built up over a year and a half of mobilization did not disappear along with the fighting. The bigger public health story that year was the influenza pandemic that reached the U.S. in a mild spring wave and then returned that fall in a far deadlier form, eventually killing roughly 675,000 Americans, more than the country’s combat losses in the war. It hit factories, docks, and shops alongside households, adding disruption to an economy already strained by wartime demand. Prices would keep climbing even after the armistice, into the postwar surge of 1919.

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