Between 1926 and 2020, the Consumer Price Index went from 17.7 to 258.811.
Cumulatively, prices increased 1362.2%, which works out to an average of
2.89% per year. Put differently, a dollar in 1926 bought what
$0.07 buys in 2020.
Consumer prices rose 1.1% in 1926, a third straight year of mild inflation
and part of the price stability that defined the middle of the decade.
Florida’s real estate boom, which had peaked the previous year on
speculative buying of undeveloped land, ended abruptly that September when
the Great Miami Hurricane made landfall near the city, killing hundreds and
wrecking the market for land whose value had rested on continued
speculation rather than anything underneath it. In Detroit, Henry Ford moved
his company to a five-day, 40-hour work week without cutting pay, a break
from the standard six-day schedule that other large employers would
gradually adopt over the following decades; Ford argued publicly that
workers with more leisure time would also become better customers for the
cars his factories built. Consumer prices remained low enough by historical
standards that a first-class stamp still cost just 2 cents, the same price
it had held since mid-1919.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1926 spending costs in 2020, by category:
Category
Avg. yearly inflation
$100 in 1926 →
All items (CPI-U)
2.89%
$1,462
Food
2.97%
$1,572
Apparel
1.63%
$456
Not shown because the BLS began these indexes after 1926: 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: 2020
2020 was the year the pandemic rewired the price data without triggering the
inflation spike that followed it. Consumer prices rose just 1.2% for the
year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads,
closed airports, and crushed energy demand. Oil told the starkest story: on
April 20, U.S. crude futures fell to about negative $37 a barrel, the first
negative settlement in the market’s history, as storage capacity ran out and no one
wanted the physical barrels. Gasoline followed it down, falling to about
$1.80 a gallon nationally that month before recovering to average $2.17 for
the year. Grocery prices moved the other way: pantry stocking and
meatpacking-plant disruptions pushed food-at-home costs up faster than
usual, a rare case of food and energy pulling the index in opposite
directions. Washington answered with the $2.2 trillion CARES Act, signed
March 27, which sent $1,200 payments to most adults and added $600 a week
to unemployment benefits as states ordered widespread business closures.
The Federal Reserve cut its policy rate to near zero in two emergency moves
that same month and pledged to buy Treasury and mortgage bonds “in the
amounts needed” to keep credit markets working, an open-ended commitment
beyond even its 2008 response. None of it showed up in the CPI yet: the
stimulus, the supply shocks, and the reopening whiplash that followed would
build into the fastest inflation in four decades over the next two years.
MLA: “Inflation from 1926 to 2020: $100 is worth $1,462 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1926-to-2020/
APA: InflationCalculator.com. Inflation from 1926 to 2020. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1926-to-2020/