Value of $100 in 1966, adjusted to 1968

What happened to prices between 1966 and 1968

Between 1966 and 1968, the Consumer Price Index went from 32.4 to 34.8. Cumulatively, prices increased 7.4%, which works out to an average of 3.64% per year. Put differently, a dollar in 1966 bought what $0.93 buys in 1968.

Consumer prices rose 2.9% in 1966, nearly double 1965’s 1.6% as Vietnam War spending kept climbing without an offsetting tax increase, pushing the economy closer to capacity and prices higher along with it. Medicare coverage took effect that July 1, extending federal health insurance to roughly 19 million Americans age 65 and older under the program signed into law the year before. The Federal Reserve had already moved to cool the overheating economy, raising its discount rate the previous December over White House objections; the tightening carried into 1966 as the first postwar credit crunch, freezing parts of the housing and municipal bond markets even as inflation kept climbing. Congress widened the wage floor’s reach that September 23, when the Fair Labor Standards Amendments of 1966 set a $1.40 minimum wage effective the following February and extended coverage to roughly 9 million more workers in retail, hospitals, schools, and other services not previously covered. Consumer prices finished 1966 227.3% above their 1913 level. First-class postage held at 5 cents, and the minimum wage stayed at $1.25 an hour for the rest of the year.

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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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