Value of $100 in 1968, adjusted to 1970

What happened to prices between 1968 and 1970

Between 1968 and 1970, the Consumer Price Index went from 34.8 to 38.8. Cumulatively, prices increased 11.5%, which works out to an average of 5.59% per year. Put differently, a dollar in 1968 bought what $0.90 buys in 1970.

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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The destination year: 1970

Consumer prices rose 5.7% in 1970, up from 1969’s 5.5%, extending a run of faster price growth that stretched back to the mid-1960s, even as a recession that began in December 1969 pushed unemployment toward 6%. Prices and joblessness rising together confounded the era’s economic thinking, which held that policymakers could trade a little more inflation for a little less unemployment; 1970 was an early sign that trade-off was breaking down, a pattern that would harden into stagflation later in the decade. Washington restructured how it delivered mail that year: after postal workers staged the first strike ever by federal employees that March, Congress passed the Postal Reorganization Act in August, replacing the cabinet-level Post Office Department with the independent U.S. Postal Service. Environmental policy also took shape in 1970. An estimated 20 million Americans marked the first Earth Day on April 22, and the Environmental Protection Agency opened that December to enforce the Clean Air Act and the pollution rules that followed. The Vietnam War kept dividing the country: on May 4, National Guard troops fired on antiwar demonstrators at Kent State University in Ohio, killing four students and setting off strikes on hundreds of campuses. A median household earned $8,734 that year, a gallon of gas averaged 36 cents, and a first-class stamp cost 6 cents, the rate it had held since 1968. Prices stood 291.9% above their 1913 level by the end of 1970, a milestone that would look almost mild against the decade still to come.

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