US Inflation Rate by Year

The 1970s Stagflation Crisis

The worst sustained inflation in modern US history. Two oil embargoes (1973, 1979), expansionary fiscal policy, and weak Fed credibility drove inflation from 3.3% in 1972 to 14.8% in 1980 — the highest annual rate since 1947. The Fed under Paul Volcker responded with aggressive rate hikes, briefly pushing the federal funds rate above 20%.

The Great Depression Deflation (1930–1933)

The CPI fell from 17.1 (1929) to 13.0 (1933) — a 24% price drop. Deflation is economically destructive: consumers delay purchases expecting lower prices, business revenues collapse, and debt burdens increase in real terms. The Fed's failure to act is now considered a major policy error.

COVID-19 and Post-Pandemic Inflation (2021–2023)

After decades of below-2% inflation, pandemic-era supply shocks, massive fiscal stimulus, and labor market disruption drove CPI from 1.2% in 2020 to 7.0% in 2021 and 6.5% in 2022 — the highest since 1981. The Fed raised rates from near-zero to over 5% in the fastest tightening cycle since the Volcker era. By 2023 inflation fell to 3.4%.

The Low-Inflation Era (1992–2019)

After Volcker tamed inflation, the US experienced 28 years of stable 1–3% inflation — a period economists call the "Great Moderation." Factors: Fed credibility under Greenspan/Bernanke/Yellen, globalization keeping import prices low, technology deflating electronics, and demographic trends increasing savings rates.