Value of $100 in 1965, adjusted to 1968

What happened to prices between 1965 and 1968

Between 1965 and 1968, the Consumer Price Index went from 31.5 to 34.8. Cumulatively, prices increased 10.5%, which works out to an average of 3.38% per year. Put differently, a dollar in 1965 bought what $0.91 buys in 1968.

Consumer prices rose 1.6% in 1965, up from 1964’s 1.3% in a pickup that economists later mark as the start of the Great Inflation, a run of accelerating price increases driven by rising Vietnam War spending layered on top of new Great Society programs. The war itself escalated on the ground that March, when about 3,500 Marines came ashore at Da Nang, the first American combat troops committed to Vietnam; troop levels would climb toward 200,000 by year’s end. Domestic policy expanded just as fast: Medicare and Medicaid became law that July 30, creating federal health insurance for older and low-income Americans, and the Voting Rights Act, signed that August 6, banned literacy tests and other devices used to disenfranchise Black voters. The civil rights movement’s gains coexisted with urban unrest that same August, when a highway patrol traffic stop in the Watts neighborhood of Los Angeles set off six days of rioting that left 34 people dead. Consumer prices finished 1965 218.2% above their 1913 level. First-class postage held at 5 cents, and the minimum wage stayed at $1.25 an hour.

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The destination year: 1968

Consumer prices rose 4.2% in 1968, up sharply from 1967’s 3.1% and the fastest pace in 17 years, as Vietnam War spending and a tight labor market pushed inflation higher despite the Federal Reserve’s earlier tightening. The year was marked by political violence: Martin Luther King Jr. was assassinated on a motel balcony in Memphis on April 4, touching off rioting in more than 100 cities, and Robert F. Kennedy was shot in Los Angeles on June 5, moments after winning California’s Democratic presidential primary, and died the next day. Washington tried to answer the inflation problem directly that June 28, when Congress passed a 10% income tax surcharge, the Revenue and Expenditure Control Act, temporarily raising taxes and cutting spending to cool an economy overheated by war and Great Society outlays; prices kept accelerating anyway. The cost of living rose in smaller, more visible ways too: first-class postage climbed to 6 cents that January 7, and the minimum wage rose to $1.60 an hour that February 1, the final step of the increase Congress had set two years earlier. Consumer prices finished 1968 251.5% above their 1913 level.

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