Value of $100 in 1945, adjusted to 1949

What happened to prices between 1945 and 1949

Between 1945 and 1949, the Consumer Price Index went from 18 to 23.8. Cumulatively, prices increased 32.2%, which works out to an average of 7.23% per year. Put differently, a dollar in 1945 bought what $0.76 buys in 1949.

Consumer prices rose 2.3% in 1945, up from 1944’s 1.7% but still modest, a rate that understated how much pressure had built up behind wartime price and wage controls, which stayed largely in place even as the conflict that justified them came to a close. The year opened with a shock at home: Franklin Roosevelt died of a cerebral hemorrhage on April 12, less than three months into an unprecedented fourth term, and Vice President Harry Truman was sworn in that same afternoon. The war Roosevelt had led for nearly four years ended without him. Germany surrendered on May 8, and Japan surrendered on August 15, after atomic bombs fell on Hiroshima and Nagasaki that month, with the formal signing aboard the USS Missouri on September 2. Domestic policy kept moving even as the guns fell silent: the federal minimum wage rose to 40 cents an hour that October 24, the final step of the schedule Congress had built into the 1938 Fair Labor Standards Act, up from 30 cents in 1939 and 25 cents at the law’s start. Consumer prices stood 81.8% above their 1913 level, a gain that would look modest next to what followed once wartime controls actually came off. First-class postage held at 3 cents.

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The destination year: 1949

Consumer prices fell 1.2% in 1949, down from 1948’s 8.1% gain and the first annual decline since 1939, the first real break in a decade otherwise defined by wartime and postwar inflation. A mild recession drove the drop: the National Bureau of Economic Research dates a downturn from November 1948 to October 1949, as businesses worked off inventories built up during the postwar buying boom and price pressure finally eased. The Cold War hardened around the same time. On April 4, the United States, Canada, and ten Western European nations signed the North Atlantic Treaty, committing to treat an attack on one member as an attack on all and formalizing the Western alliance against Soviet expansion. That August 29, the Soviet Union tested its first atomic bomb, ending the American nuclear monopoly just four years after Hiroshima and Nagasaki and setting off an arms race that would run for decades. Congress closed out the decade’s wage policy that October, passing the Fair Labor Standards Amendments of 1949 to raise the federal minimum wage to 75 cents an hour effective the following January, nearly double the 40 cents that had held since 1945. The decade closed with consumer prices 140.4% above their 1913 level, up 70% since 1940 alone even after 1949’s decline. First-class postage held at 3 cents.

More about inflation in 1949 →