Value of $100 in 1918, adjusted to 1942

What happened to prices between 1918 and 1942

Between 1918 and 1942, the Consumer Price Index went from 15.1 to 16.3. Cumulatively, prices increased 7.9%, which works out to an average of 0.32% per year. Put differently, a dollar in 1918 bought what $0.93 buys in 1942.

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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The destination year: 1942

Consumer prices rose 10.9% in 1942, up from 1941’s already rapid 5.0% and the fastest increase since 1920, as the economy’s crash conversion to war production collided with shrinking supplies of civilian goods. The government tried to contain it: the General Maximum Price Regulation, effective May 18 and known as “General Max,” froze most retail prices at their highest March level, the broadest price control Washington had ever attempted. Rationing followed close behind. Sugar rationing began that May and gasoline rationing went nationwide in December, the leading edge of a system that would eventually cover meat, coffee, shoes, tires, and dozens of other goods before the war ended. The year’s other defining wartime measure had nothing to do with prices. Executive Order 9066, signed February 19, authorized the military to remove more than 110,000 Japanese Americans, most of them U.S. citizens, from the West Coast and hold them in inland internment camps for the war’s duration, one of the era’s starkest violations of civil liberties. Even with price controls in place, consumer prices climbed more than 10% for the first time since 1920, leaving the CPI 64.6% above its 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

More about inflation in 1942 →