Between 1922 and 1981, the Consumer Price Index went from 16.8 to 90.9.
Cumulatively, prices increased 441.1%, which works out to an average of
2.90% per year. Put differently, a dollar in 1922 bought what
$0.18 buys in 1981.
Consumer prices fell another 6.1% in 1922, the second straight year of
decline, even as the broader economy climbed out of the Depression of
1920-21 and industrial production rebounded. The CPI had now given back
roughly a third of its wartime runup, though it stayed well above the
1913 baseline. Congress moved to shield that recovery from
foreign competition: the Fordney-McCumber Tariff Act, signed September 21,
raised duties on hundreds of imported goods to some of the highest levels in
U.S. history, a policy meant to protect farmers and manufacturers still
adjusting to postwar prices. Labor tension flared even as prices fell.
Roughly half a million bituminous coal miners struck that April over wage
cuts employers had imposed as prices dropped, and hundreds of thousands of
railroad shop workers walked out in July in a separate dispute over pay and
work rules, together the largest strike wave since 1919. Both disputes
dragged on for months and drew federal mediation before ending without full
concessions for the workers. First-class postage remained at 2 cents.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1922 spending costs in 1981, by category:
Category
Avg. yearly inflation
$100 in 1922 →
All items (CPI-U)
2.90%
$541
Food
3.16%
$628
Apparel
2.16%
$353
Not shown because the BLS began these indexes after 1922: 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 2 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 1922 to 1981: $100 is worth $541 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1922-to-1981/
APA: InflationCalculator.com. Inflation from 1922 to 1981. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1922-to-1981/