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Justin Fox

To Judge Inflation, Think of the Pandemic as a War

Lots of people still remember the soaring prices of the 1970s, but 1919 and 1947 might tell us more about what to expect from the economy in the coming year.

Familiar themes in post-war 1920 America.

Familiar themes in post-war 1920 America.

Source: Hirz/Archive Photos


The jump in U.S. consumer prices as the economy began reopening this spring — they rose 4.2% over the 12 months ending in April — has prompted a lot of historical comparisons to the bad old inflationary days of the 1970s.

If we’re going to do historical comparisons, though, why stop at the 1970s? The Bureau of Labor Statistics has monthly consumer price index numbers going back to January 1913, allowing us to calculate 12-month inflation rates from January 1914 onward. That’s just in time to catch the biggest inflation wave in the series, with consumer prices more than doubling from 1915 to 1920 and the 12-month price increase peaking at 23.7% in June 1920.