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Since the end of World War II, inflation has been relatively constrained. There have been just a few times when the year-over-year change of the consumer price index topped 5%. You can see this illustrated in the chart below. Source: Federal Reserve In the late 1940s, inflation roared after the government lifted price controls that had been imposed during World War II. In the 1950s, inflation rose as the government increased spending to fight the Korean War. The Vietnam War explains the rise in inflation in the 1960s. In the 1970s, wars indirectly drove… Read More

Since the end of World War II, inflation has been relatively constrained. There have been just a few times when the year-over-year change of the consumer price index topped 5%. You can see this illustrated in the chart below. Source: Federal Reserve In the late 1940s, inflation roared after the government lifted price controls that had been imposed during World War II. In the 1950s, inflation rose as the government increased spending to fight the Korean War. The Vietnam War explains the rise in inflation in the 1960s. In the 1970s, wars indirectly drove inflation. In the early 1970s, oil prices jumped after OPEC imposed an embargo on countries that had supported Israel in the Yom Kippur War. Late in the decade, the revolution in Iran lowered that country’s oil production and prices rose again. The inflationary spike in the early 1990s was again due to oil and war, this time the first Gulf War that ended quickly. The next time inflation spiked was in 2008. This time there wasn’t a war. China’s economic growth increased demand for raw materials, especially oil, and the spike in oil drove inflation higher. What We Can Learn… Read More