The Long ViewNo. 20
Inflation's long arc: consumer prices since the 1940s
From the postwar spikes to the Great Inflation and the 2022 surge, in one line.
Few economic numbers touch as many lives as the inflation rate. The Consumer Price Index, compiled by the Bureau of Labor Statistics from the prices of a broad basket of goods and services, has been published on its current basis for urban consumers since 1947 — long enough to show inflation's full range of behavior.
Source: Federal Reserve Bank of St. Louis (FRED). Shaded areas indicate U.S. recessions as dated by the NBER.
Where it stands
As of August 1, 2026, the annual CPI inflation rate stood at 3.4%. Since January 1948, it has averaged 3.5%, with a median of 2.9%. Today's reading is higher than 60% of all observations in that span. The high point was 14.6% in March 1980; the low was -3.0% in August 1949.
For comparison, it was 5.2% five years ago, 0.9% ten years ago, and 3.9% twenty years ago.
Average by decade
| 1940s | 1950s | 1960s | 1970s | 1980s | 1990s | 2000s | 2010s | 2020s |
|---|---|---|---|---|---|---|---|---|
| 3.4% | 2.1% | 2.3% | 7.1% | 5.6% | 3.0% | 2.6% | 1.8% | 3.9% |
The history
Two episodes stand out. In the 1970s, successive oil shocks and loose monetary policy pushed annual inflation above 14% by 1980, and it took a severe tightening by the Federal Reserve to bring it down. Four decades later, pandemic-era supply disruptions, shifts in demand, and large fiscal support pushed CPI inflation to about 9% in mid-2022, its highest in roughly 40 years, before it cooled.
Why it matters
The Federal Reserve targets 2% inflation as measured by a related gauge, the PCE price index, which tends to run slightly below CPI. Persistent gaps between actual inflation and that goal usually shape the path of interest rates — and with it, borrowing costs across the economy.
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