Between 1974 and 1975, the Consumer Price Index went from 49.3 to 53.8.
Cumulatively, prices increased 9.1%, which works out to an average of
9.13% per year. Put differently, a dollar in 1974 bought what
$0.92 buys in 1975.
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.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1974 spending costs in 1975, by category:
Category
Avg. yearly inflation
$100 in 1974 →
All items (CPI-U)
9.13%
$109
Medical care
12.03%
$112
Housing
10.70%
$111
Energy
10.50%
$110
Transportation
9.39%
$109
Core (all items less food & energy)
9.11%
$109
Food
8.53%
$109
Apparel
4.47%
$104
Not shown because the BLS began these indexes after 1974: recreation (1993–), education & communication (1993–).
Consumer prices rose 9.1% in 1975, easing slightly from 1974’s
11.0% but still running far above anything the country had experienced before
the decade began. The recession that started in November 1973, the deepest
since the Great Depression, bottomed out that March, yet unemployment kept
climbing through the year and touched 9%, a combination of high inflation and
high joblessness that had no precedent in the postwar data. Vietnam ended
that April 30, when North Vietnamese forces captured Saigon and the last
Americans were evacuated by helicopter from the U.S. embassy roof. Fiscal
strain hit closer to home too: New York City, facing bankruptcy after years
of borrowing to paper over budget gaps, asked Washington for help that
October. President Ford’s initial refusal produced the Daily News headline
“Ford to City: Drop Dead,” though he ultimately signed a federal loan package
that December. Amid the gloom, Bill Gates and Paul Allen founded Microsoft
that April in Albuquerque, New Mexico, to sell a version of the BASIC
programming language for the Altair 8800, one of the first personal
computers sold to hobbyists. A median household earned $11,800 in 1975, a new
home sold for a median $39,300, and first-class postage held at 10 cents,
unchanged since 1974’s increase. Consumer prices stood 443.4%
above their 1913 level, with the decade barely past its
midpoint.
MLA: “Inflation from 1974 to 1975: $100 is worth $109 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1974-to-1975/
APA: InflationCalculator.com. Inflation from 1974 to 1975. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1974-to-1975/