Consumer prices rose 7.6% in 1978, accelerating for a second straight year as rising wages, a weakening dollar, and climbing energy costs outpaced the Federal Reserve’s response. Fed chairman G. William Miller, appointed by Carter that March, kept interest rates too low to slow the trend, a policy later cited as one reason inflation kept building toward the following year’s crisis. California voters responded to their own version of the problem that June, passing Proposition 13 by nearly two to one to cap property tax rates after years of rising home values had pushed tax bills up alongside them. Foreign policy delivered one of the decade’s genuine breakthroughs: President Carter brought Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin together for thirteen days of negotiations at Camp David that September, producing a framework for peace between the two countries that was signed as a treaty the following March. First-class postage rose to 15 cents that May 29, a rate that would hold longer than any other in the decade. The year ended in tragedy: cult leader Jim Jones directed the mass murder-suicide of more than 900 followers at a remote settlement in Guyana that November 18. A median household earned $15,064 in 1978, a new home sold for a median $55,700, and gas averaged 63 cents a gallon. Consumer prices stood 558.6% above their 1913 level, with the decade’s worst inflation still to come.
Year in review
Inflation in 1978
The U.S. inflation rate in 1978 was 7.6% (CPI: 65.2). Convert 1978 dollars to today →
7.6% 1978 inflation rate
7.1% 1970s average
9.0% peak month (Dec)
6.4% lowest month (Feb)
What things cost in 1978
| Median household income | $15,064 |
|---|---|
| Gas (per gallon) | $0.63 |
| Median home price | $55,700 |
| First-class stamp | $0.15 |
| Federal minimum wage | $2.65 |
What $100 from 1978 was worth later
| In 1980 | $126 |
|---|---|
| In 1990 | $200 |
| In 2000 | $264 |
| In 2010 | $334 |
| In 2020 | $397 |
| In 2026 | $509 |
Inflation in 1978, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 62.5 | 6.8% |
| February | 62.9 | 6.4% |
| March | 63.4 | 6.6% |
| April | 63.9 | 6.5% |
| May | 64.5 | 7.0% |
| June | 65.2 | 7.4% |
| July | 65.7 | 7.7% |
| August | 66 | 7.8% |
| September | 66.5 | 8.3% |
| October | 67.1 | 8.9% |
| November | 67.4 | 8.9% |
| December | 67.7 | 9.0% |
Economic events of 1978
- Consumer prices rise 7.6% as inflation accelerates again Price growth quickened for a second straight year, driven by rising wages, a weakening dollar, and energy costs, as the Federal Reserve under chairman G. William Miller kept interest rates too low to slow the trend.
- California voters pass Proposition 13, slashing property taxes Approved that June with nearly two-thirds support, the measure capped property tax rates and assessment growth, a direct response to home values, and the tax bills tied to them, that had risen sharply through the decade.
- The Camp David Accords produce a framework for peace between Egypt and Israel President Carter brokered thirteen days of negotiations at Camp David that September between Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin, leading to a peace treaty signed the following March.
- First-class postage rises to 15 cents The rate took effect May 29, 1978, and would hold for nearly three years, longer than any other rate in the decade.
- More than 900 people die at Jonestown Cult leader Jim Jones directed the mass murder-suicide of his followers at a remote settlement in Guyana on November 18, one of the largest single losses of American civilian life in a deliberate act of the 20th century.
Sources: U.S. Bureau of Labor Statistics, Consumer Price Index history; U.S. Census Bureau, Current Population Survey (income); U.S. Census Bureau, New Residential Sales (home price); U.S. Department of Labor (minimum wage); USPS historical rates; Federal Reserve History (G. William Miller); National Archives (Camp David Accords; Proposition 13).
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages. See the methodology.