Between 1973 and 1974, the Consumer Price Index went from 44.4 to 49.3.
Cumulatively, prices increased 11.0%, which works out to an average of
11.04% per year. Put differently, a dollar in 1973 bought what
$0.90 buys in 1974.
Consumer prices rose 6.2% in 1973, nearly double 1972’s 3.2%,
as Nixon’s wage and price controls were phased out through the year and
pressure the controls had been holding back broke loose. The bigger shock
arrived that October, when Arab oil-producing states embargoed exports to the
United States and other supporters of Israel in the Yom Kippur War. Crude
oil, which had traded around $3 a barrel, approached $12 by early 1974, and
gas lines became a fixture outside filling stations nationwide. Earlier in
the year, the Paris Peace Accords, signed that January 27, ended direct
American combat in Vietnam and set a 60-day deadline for withdrawing
remaining U.S. troops, even as fighting between North and South Vietnam went
on. Financial markets read the year correctly as a turning point: the Dow
Jones Industrial Average peaked at 1,051.70 on January 11, a level it would
not reach again until 1980, before the oil shock and rising interest rates
dragged it into a two-year bear market. A median household earned $10,512 in
1973, a new home sold for a median $32,500, and gas averaged 38.5 cents a
gallon, still under half of what the embargo’s effects would bring the
following year. Consumer prices stood 348.5% above their
1913 level by year’s end, with the decade’s worst inflation
still ahead.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1973 spending costs in 1974, by category:
Category
Avg. yearly inflation
$100 in 1973 →
All items (CPI-U)
11.04%
$111
Energy
29.59%
$130
Food
14.32%
$114
Housing
11.17%
$111
Transportation
11.17%
$111
Medical care
9.28%
$109
Core (all items less food & energy)
8.33%
$108
Apparel
7.43%
$107
Not shown because the BLS began these indexes after 1973: recreation (1993–), education & communication (1993–).
1974 was the year the postwar economy broke its old rules. Consumer prices
rose 11.0%, the fastest annual increase since 1947, as the Arab oil embargo
that ran from October 1973 to March 1974 roughly quadrupled the price of
crude oil worldwide. Gasoline, which had averaged 38.5 cents a gallon in
1973, jumped to 53.2 cents, and shortages forced many states into odd-even
rationing at the pump. Nixon’s wage and price controls, in place in some form
since 1971, expired at the end of April, removing the last brake on prices
just as the oil shock hit. Nixon himself resigned in August over Watergate,
and Gerald Ford’s response to inflation, a voluntary “Whip Inflation Now”
campaign built around lapel buttons, became a symbol of how little
conventional politics could do against the problem. Prices kept climbing even
as the economy weakened: a recession that started in November 1973 dragged
on, the Dow fell to a bear-market bottom of 577.60 in December, and
unemployment was already rising toward the 9% it would reach in 1975. The
combination of rising prices and a shrinking economy gave the decade its
name: stagflation.
MLA: “Inflation from 1973 to 1974: $100 is worth $111 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1973-to-1974/
APA: InflationCalculator.com. Inflation from 1973 to 1974. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1973-to-1974/