Value of $100 in 1951, adjusted to 1953

What happened to prices between 1951 and 1953

Between 1951 and 1953, the Consumer Price Index went from 26 to 26.7. Cumulatively, prices increased 2.7%, which works out to an average of 1.34% per year. Put differently, a dollar in 1951 bought what $0.97 buys in 1953.

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.

More about inflation in 1951 →

The destination year: 1953

Consumer prices rose 0.8% in 1953, down from 1952’s 1.9% as fighting in Korea wound toward a truce and three years of wartime buying pressure finally eased. The year’s biggest shock came from Moscow: Soviet leader Joseph Stalin died March 5 after nearly three decades in power, the first change of Soviet leadership since the 1920s, opening a period of uncertainty over how his successors would deal with the West. Washington used the calmer backdrop to unwind its own wartime machinery. Authority for the price and wage controls imposed in 1951 lapsed that spring, as the Eisenhower administration, which favored free markets over controls, wound down the Office of Price Stabilization. The war itself ended, on paper, that July: negotiators signed an armistice July 27 at Panmunjom, halting the fighting roughly along the original border near the 38th parallel. No formal peace treaty ever followed, and North and South Korea remain technically at war. Consumer prices finished 1953 169.7% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 75 cents an hour.

More about inflation in 1953 →