Value of $100 in 1948, adjusted to 1951

What happened to prices between 1948 and 1951

Between 1948 and 1951, the Consumer Price Index went from 24.1 to 26. Cumulatively, prices increased 7.9%, which works out to an average of 2.56% per year. Put differently, a dollar in 1948 bought what $0.93 buys in 1951.

Consumer prices rose 8.1% in 1948, down slightly from 1947’s 14.4% but still the second straight year of sharp postwar inflation now that wartime price controls were fully gone. Congress moved to stabilize a different economy that April, passing the Economic Cooperation Act to fund the plan Secretary of State George Marshall had proposed the year before: more than $13 billion over four years to rebuild Western Europe and counter Soviet influence. The Cold War turned tense closer to the plan’s target that June, when Soviet forces cut off road and rail access to the Western-controlled sectors of Berlin. American and British aircraft responded almost immediately with an airlift of food, fuel, and supplies that would keep the city running for nearly a year. Domestic politics produced its own upset that November: nearly every poll and pundit had predicted a Republican win, but Harry Truman defeated New York Governor Thomas Dewey, handing the Chicago Tribune its famously wrong “Dewey Defeats Truman” headline. Consumer prices finished the year 143.4% above their 1913 level and 40.9% above 1929’s pre-Depression peak. First-class postage held at 3 cents, and the minimum wage stayed at 40 cents an hour.

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The destination year: 1951

Consumer prices rose 7.9% in 1951, up sharply from 1950’s 1.3% and the fastest increase since 1947, as Korean War buying and a defense spending surge hit an economy still adjusting to peacetime. Much of the jump came early in the year, before the government stepped in: the Office of Price Stabilization imposed a general ceiling on prices January 26, and the Wage Stabilization Board froze wages soon after, the broadest peacetime controls since the war began that June. The year’s more lasting change came in monetary policy. On March 4, the Treasury and the Federal Reserve signed the Accord, ending the Fed’s wartime obligation to hold down interest rates on government bonds and freeing the central bank to fight inflation on its own terms for the first time since 1942, a shift that would shape Fed independence for decades. Congress raised taxes that October to help pay for the war: the Revenue Act of 1951, signed October 20, lifted individual and corporate income taxes along with a range of excise taxes, the third increase in taxes since fighting began in Korea. Consumer prices finished 1951 162.6% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 75 cents an hour.

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