Money feels fake sometimes. You look at a receipt from three years ago and honestly, it feels like a relic from a different civilization. If you think the price of eggs is wild now, looking back at the historical inflation United States data is basically a trip through a fever dream of policy shifts, wars, and sheer bad luck.
Inflation isn't just one thing. It’s not just "prices going up." It’s the story of the dollar losing its muscle. Since the Bureau of Labor Statistics (BLS) started tracking the Consumer Price Index (CPI) in 1913, the U.S. has seen everything from 20% spikes to actual deflation where prices dropped. People forget that part. Prices can actually go down, though it usually means the economy is in a ditch.
The Great War and the First Big Spike
Before the Federal Reserve really knew how to pull the levers of power, World War I hit. This was the first major test of the modern American financial system. Between 1917 and 1920, inflation went absolutely nuclear. We’re talking 15% to 20% year-over-year.
Why? Because the government had to pay for a massive war. They printed money. They encouraged people to buy Liberty Bonds. Production shifted from "things people buy" to "things that explode." When the war ended, everyone had cash but there weren't enough boots, suits, or steaks to go around.
Then came the crash.
Most people talk about the Great Depression in 1929, but the 1920-1921 period saw a brutal bout of deflation. Prices fell by nearly 11%. If you had cash, you were a king. If you had debt, you were buried. This era taught the Fed a lesson they’d eventually forget: you can't just turn the money faucet on and off without breaking the pipes.
✨ Don't miss: How to make a living selling on eBay: What actually works in 2026
The 1970s: The Era Everyone Fears
If you ask an economist about historical inflation United States, they will eventually start shaking and talking about 1974. This was the era of "Stagflation." It’s a hideous word for a hideous situation: high inflation mixed with high unemployment. Usually, those two things aren't supposed to happen at the same time.
It was a perfect storm.
- President Nixon took the U.S. off the gold standard in 1971. The dollar was suddenly "fiat," backed by nothing but "trust me, bro."
- The OPEC oil embargoes in 1973 and 1979 sent energy costs into the stratosphere.
- The Fed was too timid. They'd raise rates, the economy would hurt, and they’d chicken out and lower them again.
By 1980, inflation hit 14.8%. Imagine your savings losing 15% of their value in twelve months. It was a crisis of confidence. People bought stuff—toasters, cars, cans of tuna—just to get rid of their cash before it became worthless the next week.
Enter Paul Volcker.
Volcker was the Fed Chair who decided to play the villain. He cranked interest rates up to 20%. It caused a massive recession. People hated him. Farmers drove tractors to D.C. to block the Fed building. But it worked. He "broke the back" of inflation, leading to decades of relatively stable prices. Honestly, we’ve been living in Volcker's shadow ever since.
🔗 Read more: How Much Followers on TikTok to Get Paid: What Really Matters in 2026
The Post-Pandemic Mess
We can't talk about history without looking at 2021 and 2022. For years, inflation was so low—around 2%—that we almost forgot it existed. Then the world stopped.
The COVID-19 stimulus was massive. Trillions of dollars pumped into bank accounts while factories in China were closed. Supply chains didn't just "slow down"; they broke. When things reopened, everyone tried to buy a couch and a used car at the same time.
In June 2022, CPI hit 9.1%.
The "transitory" debate will be in textbooks forever. Jerome Powell and the Fed insisted for months that the price spikes were temporary. They were wrong. It turns out that when you combine a labor shortage, a war in Ukraine (which spiked grain and gas prices), and a massive increase in the money supply (M2), inflation isn't going to just "pass through." It's going to stay for dinner.
Why 2% is the Magic Number
You've probably heard the Fed talk about their 2% target. Why 2%? Why not 0%?
💡 You might also like: How Much 100 Dollars in Ghana Cedis Gets You Right Now: The Reality
Economists like a little bit of inflation. It’s like grease on the gears. If inflation is 0%, people might stop spending because they think things will be cheaper next month. That leads to stagnation. If it's too high, nobody can plan for the future. 2% is the "Goldilocks" zone where you don't really notice your money losing value day-to-day, but the economy keeps churning.
Real World Impact: The "Invisible Tax"
Historical inflation in the United States shows us that the people hit hardest are rarely the ones in the headlines. It’s the "fixed income" crowd. If you’re a retiree living on a pension that doesn't adjust, 8% inflation is a 8% pay cut. Period.
It also distorts the housing market. In the late 70s, mortgage rates were 18%. Think about that next time you complain about a 7% rate. At 18%, you’re basically paying for the house three times over in interest.
What You Can Actually Do About It
Looking at the data, one thing is clear: cash is a terrible long-term strategy. If you put $100 under a mattress in 1970, it would have the purchasing power of about $13 today.
- Own Assets: Historically, real estate and stocks have been the only things that consistently outpace the CPI. They represent "real" things that adjust their prices.
- Watch the Fed: Their "dot plot" and meeting minutes are the best weather vane we have. When they say they're worried about "inflation expectations," it means they're about to get aggressive.
- Diversify Income: In high-inflation eras, your salary is usually the last thing to go up. Having a side hustle or investments that pay dividends helps bridge that "lag" time.
- TIPS and I-Bonds: The government actually sells bonds that are indexed to inflation. When CPI goes up, the value of your bond goes up. It’s the only way to play defense with "guaranteed" money.
Inflation isn't a ghost; it's a cycle. We’ve been here before, from the greenbacks of the Civil War to the gas lines of the Jimmy Carter years. The trick isn't hoping it goes away—it's making sure your net worth isn't sitting in a bucket with a hole in the bottom.
Actionable Insights for the Current Economy
To stay ahead of the curve, you should audit your debt. High inflation is actually "good" for people with fixed-rate debt like a 3% mortgage, because you're paying back the bank with "cheaper" dollars. Conversely, clear out any variable-interest debt like credit cards immediately. Those rates climb faster than the price of milk. Review your investment portfolio to ensure you have exposure to commodities or value stocks, which tend to handle price volatility better than high-growth tech firms that rely on cheap borrowing. Finally, keep an eye on the labor market; when wage growth starts to outpace inflation, that's usually the sign that the cycle is finally cooling down or entering a "soft landing."