Between 1974 and 2020, the Consumer Price Index went from 49.3 to 258.811.
Cumulatively, prices increased 425.0%, which works out to an average of
3.67% per year. Put differently, a dollar in 1974 bought what
$0.19 buys in 2020.
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 2020, by category:
Category
Avg. yearly inflation
$100 in 1974 →
All items (CPI-U)
3.67%
$525
Medical care
5.60%
$1,224
Housing
3.95%
$593
Core (all items less food & energy)
3.74%
$542
Energy
3.64%
$517
Food
3.49%
$485
Transportation
3.27%
$440
Apparel
1.16%
$170
Not shown because the BLS began these indexes after 1974: recreation (1993–), education & communication (1993–).
Long periods are sampled every 2 years; the calculator above covers any pair of years.
The destination year: 2020
2020 was the year the pandemic rewired the price data without triggering the
inflation spike that followed it. Consumer prices rose just 1.2% for the
year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads,
closed airports, and crushed energy demand. Oil told the starkest story: on
April 20, U.S. crude futures fell to about negative $37 a barrel, the first
negative settlement in the market’s history, as storage capacity ran out and no one
wanted the physical barrels. Gasoline followed it down, falling to about
$1.80 a gallon nationally that month before recovering to average $2.17 for
the year. Grocery prices moved the other way: pantry stocking and
meatpacking-plant disruptions pushed food-at-home costs up faster than
usual, a rare case of food and energy pulling the index in opposite
directions. Washington answered with the $2.2 trillion CARES Act, signed
March 27, which sent $1,200 payments to most adults and added $600 a week
to unemployment benefits as states ordered widespread business closures.
The Federal Reserve cut its policy rate to near zero in two emergency moves
that same month and pledged to buy Treasury and mortgage bonds “in the
amounts needed” to keep credit markets working, an open-ended commitment
beyond even its 2008 response. None of it showed up in the CPI yet: the
stimulus, the supply shocks, and the reopening whiplash that followed would
build into the fastest inflation in four decades over the next two years.
MLA: “Inflation from 1974 to 2020: $100 is worth $525 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1974-to-2020/
APA: InflationCalculator.com. Inflation from 1974 to 2020. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1974-to-2020/