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.
Year in review
Inflation in 1980
The U.S. inflation rate in 1980 was 13.5% (CPI: 82.4). Convert 1980 dollars to today →
13.5% 1980 inflation rate
5.6% 1980s average
14.8% peak month (Mar)
12.5% lowest month (Dec)
What things cost in 1980
| Median household income | $17,710 |
|---|---|
| Gas (per gallon) | $1.19 |
| Median home price | $64,600 |
| First-class stamp | $0.15 |
| Federal minimum wage | $3.10 |
What $100 from 1980 was worth later
| In 1990 | $159 |
|---|---|
| In 2000 | $209 |
| In 2010 | $265 |
| In 2020 | $314 |
| In 2026 | $401 |
Inflation in 1980, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 77.8 | 13.9% |
| February | 78.9 | 14.2% |
| March | 80.1 | 14.8% |
| April | 81 | 14.7% |
| May | 81.8 | 14.4% |
| June | 82.7 | 14.4% |
| July | 82.7 | 13.1% |
| August | 83.3 | 12.9% |
| September | 84 | 12.6% |
| October | 84.8 | 12.8% |
| November | 85.5 | 12.6% |
| December | 86.3 | 12.5% |
Economic events of 1980
- Annual inflation hits 13.5%, the highest peacetime rate in modern U.S. history The peak of the "Great Inflation" that had been building since the mid-1960s, fed by Vietnam-era deficits, two oil shocks, a weakening dollar, and years of Federal Reserve policy that eased off before inflation was beaten. By 1980, households expected double-digit inflation as a fact of life, which itself pushed wages and prices higher.
- The Volcker Fed pushes interest rates toward 20% Paul Volcker, appointed Fed chairman in August 1979, had switched the Fed to strictly limiting money-supply growth. Interest rates were left to soar, with the federal funds rate touching 20% in the spring, and a brief recession hit between January and July 1980, the first dip of what became a double-dip.
- The second oil shock works through prices The 1979 Iranian revolution had cut world oil supply, roughly doubling crude prices between 1978 and 1980. Gasoline and heating costs surged through American budgets all year. Energy was the single biggest driver of the 13.5% headline rate.
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages. See the methodology.