Between 1918 and 1981, the Consumer Price Index went from 15.1 to 90.9.
Cumulatively, prices increased 502.0%, which works out to an average of
2.89% per year. Put differently, a dollar in 1918 bought what
$0.17 buys in 1981.
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.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1918 spending costs in 1981, by category:
Category
Avg. yearly inflation
$100 in 1918 →
All items (CPI-U)
2.89%
$602
Food
2.77%
$560
Apparel
2.00%
$349
Not shown because the BLS began these indexes after 1918: core (all items less food & energy) (1957–), energy (1957–), housing (1967–), medical care (1935–), transportation (1935–), recreation (1993–), education & communication (1993–).
Long periods are sampled every 5 years; the calculator above covers any pair of years.
The destination year: 1981
1981 was the year the inflation fever finally broke, at an extraordinary price.
Consumer prices rose 10.3%, the second year of back-to-back double-digit
inflation and the last time the U.S. would see one. To end it, Paul Volcker’s
Federal Reserve drove its policy rate above 19% and let borrowing costs go
where they may: a 30-year mortgage cost more than 18% by autumn, car loans and
business credit froze, and homebuilders mailed the Fed two-by-fours in protest.
The squeeze tipped the economy into recession in July, the deep 1981–82
downturn that would push unemployment past 10%. But it worked. Inflation fell
by nearly half within a year and to under 4% by 1983, the disinflation that
defined the following two decades. Even the price of mailing a letter told the
year’s story: postage went up twice in eight months.
MLA: “Inflation from 1918 to 1981: $100 is worth $602 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1918-to-1981/
APA: InflationCalculator.com. Inflation from 1918 to 1981. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1918-to-1981/