What happened to prices between 1980 and 2007
Between 1980 and 2007, the Consumer Price Index went from 82.4 to 207.342. Cumulatively, prices increased 151.6%, which works out to an average of 3.48% per year. Put differently, a dollar in 1980 bought what $0.40 buys in 2007.
1980 sat at the very peak of the Great Inflation. Prices rose 13.5% in that single year, mortgage rates were climbing toward 16%, and the Federal Reserve under Paul Volcker was administering the painful interest-rate medicine that would finally break the inflationary spiral, at the cost of the deep 1981–82 recession. No single year looms larger in how Americans think about inflation.