Consumer prices rose 11.3% in 1979, the fastest pace since 1947 and the decade’s second bout of double-digit inflation after 1974’s 11.0%. The trigger was familiar: the Iranian Revolution that January halted Iran’s oil exports, and panic buying amplified the shortage, sending crude prices sharply higher over the year and motorists back into gas lines, with some states reviving the odd-even rationing last seen in 1974. Paul Volcker, appointed Federal Reserve chairman that August, responded with a strategy shift announced that October: the Fed would target the money supply directly and let interest rates rise as high as necessary to break inflation, whatever the short-term cost. That cost would arrive as a deep recession in 1981-82, but by year’s end 1979 had already delivered enough turmoil on its own. A reactor at the Three Mile Island plant near Harrisburg, Pennsylvania, suffered a partial core meltdown that March 28, the worst commercial nuclear accident in U.S. history, and on November 4, militants in Tehran stormed the U.S. embassy and took 52 Americans hostage, beginning a 444-day crisis that consumed the rest of Carter’s presidency. A median household earned $16,461 in 1979, a new home sold for a median $62,900, and gas jumped to 86 cents a gallon. Consumer prices finished the decade 97.8% above where they stood in 1969, very nearly doubling in ten years, and stood 633.3% above their 1913 level. The 1970s had opened with inflation cooling from the 1969 spike and closed with prices rising faster than at any point since 1947, setting up the Great Inflation’s final act in 1980.
Year in review
Inflation in 1979
The U.S. inflation rate in 1979 was 11.3% (CPI: 72.6). Convert 1979 dollars to today →
11.3% 1979 inflation rate
7.1% 1970s average
13.3% peak month (Dec)
9.3% lowest month (Jan)
What things cost in 1979
| Median household income | $16,461 |
|---|---|
| Gas (per gallon) | $0.86 |
| Median home price | $62,900 |
| First-class stamp | $0.15 |
| Federal minimum wage | $2.90 |
What $100 from 1979 was worth later
| In 1980 | $113 |
|---|---|
| In 1990 | $180 |
| In 2000 | $237 |
| In 2010 | $300 |
| In 2020 | $356 |
| In 2026 | $457 |
Inflation in 1979, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 68.3 | 9.3% |
| February | 69.1 | 9.9% |
| March | 69.8 | 10.1% |
| April | 70.6 | 10.5% |
| May | 71.5 | 10.9% |
| June | 72.3 | 10.9% |
| July | 73.1 | 11.3% |
| August | 73.8 | 11.8% |
| September | 74.6 | 12.2% |
| October | 75.2 | 12.1% |
| November | 75.9 | 12.6% |
| December | 76.7 | 13.3% |
Economic events of 1979
- Consumer prices rise 11.3%, the fastest pace since 1947 The Iranian Revolution cut world oil supply and pushed crude prices sharply higher during the year, driving inflation back into double digits for the first time since [1974](/year/1974/) and setting up the fight the Federal Reserve would wage into the 1980s.
- The Iranian Revolution triggers a second oil shock and new gas lines The Shah's departure that January began the revolution that halted Iranian oil exports, and panic buying amplified the resulting shortage; motorists across the United States again faced long lines and, in some states, odd-even rationing at the pump.
- Paul Volcker becomes Fed chairman and pledges to break inflation Appointed by Carter that August, Volcker announced a fundamental shift in Fed strategy that October, targeting the money supply directly and letting interest rates rise however high was needed to bring inflation down, a policy that would trigger a deep recession in 1981-82.
- A partial meltdown at Three Mile Island shakes confidence in nuclear power A reactor at the Three Mile Island plant near Harrisburg, Pennsylvania, suffered a partial core meltdown on March 28, the worst commercial nuclear accident in U.S. history, and stalled new nuclear plant construction for decades.
- Iranian militants seize the U.S. embassy in Tehran On November 4, militants stormed the embassy and took 52 Americans hostage, beginning a 444-day crisis that dominated the final year of the Carter presidency.
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. Energy Information Administration (gasoline); U.S. Department of Labor (minimum wage); USPS historical rates; Federal Reserve History (Paul Volcker); Nuclear Regulatory Commission (Three Mile Island); U.S. Department of State Office of the Historian (Iran hostage crisis).
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages. See the methodology.