U.S. inflation rate in 1974: 11.04%

Inflation Calculator

$

Inflation in 1974 and Its Effect on Dollar Value

Purchasing power decreased by 11.04% in 1974 compared to the previous year, 1973. On average, you would have to spend 11.04% more money in 1974 than in 1973 for the same item.

In other words, $1 in 1973 is equivalent in purchasing power to $1.11 in 1974.

The 1973 inflation rate was 6.22%. The inflation rate in 1974 was 11.04%. The 1974 inflation rate is higher compared to the average inflation rate of 3.79% per year between 1974 and 2018.

Inflation rate is calculated by change in the consumer price index (CPI). The CPI in 1974 was 49.3. It was 44.4 in the previous year, 1973. The difference in CPI between the years is used by the Bureau of Labor Statistics to officially determine inflation.


Inflation from 1973 to 1974
Average inflation rate 11.04%
Converted amount ($1 base) $1.11
Price difference ($1 base) $0.11
CPI in 1973 44.400
CPI in 1974 49.300
Inflation in 1973 6.22%
Inflation in 1974 11.04%


U.S. Inflation since 1913
Annual Rate, U.S. Bureau of Labor Statistics CPI

Inflation by City

Inflation can vary widely by city, even within the United States. Here's how some cities fared in 1973 to 1974 (figures shown are purchasing power equivalents of $1):

Philadelphia, Pennsylvania experienced the highest rate of inflation during the 1 years between 1973 and 1974 (11.87%).

San Francisco, California experienced the lowest rate of inflation during the 1 years between 1973 and 1974 (9.32%).

Note that some locations showing 0% inflation may have not yet reported latest data.


Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £1.00 in 1973 would be equivalent to £1.16 in 1974, an absolute change of £0.16 and a cumulative change of 16.04%.

In Canada, CA$1.00 in 1973 would be equivalent to CA$1.13 in 1974, an absolute change of CA$0.13 and a cumulative change of 12.65%.

Compare these numbers to the US's overall absolute change of $0.11 and total percent change of 11.04%.


Inflation by Spending Category

CPI is the weighted combination of many categories of spending that are tracked by the government. This chart shows the average rate of inflation for select CPI categories between 1973 and 1974.

Compare these values to the overall average of 11.04% per year:

Category Avg Inflation (%) Total Inflation (%) $1 in 1973 → 1974
Food 14.40 14.40 1.14
Shelter 9.71 9.71 1.10
Energy 29.21 29.21 1.29
Apparel 7.41 7.41 1.07
New vehicles 0.00 0.00 1.00
Used cars and trucks 0.00 0.00 1.00
Transportation services 0.00 0.00 1.00
Medical care services 10.23 10.23 1.10
Medical care commodities 3.44 3.44 1.03

It's important to note that not all categories may be tracked since 1973. This table and visualization use the earliest available data for each category.



How to Calculate Inflation Rate for $1, 1973 to 1974

This inflation calculator uses the following inflation rate formula:

CPI in 1974CPI in 1973
×
1973 USD value
=
1974 USD value

Then plug in historical CPI values. The U.S. CPI was 44.4 in the year 1973 and 49.3 in 1974:

49.344.4
×
$1
=
$1.11

$1 in 1973 has the same "purchasing power" or "buying power" as $1.11 in 1974.

To get the total inflation rate for the 1 years between 1973 and 1974, we use the following formula:

CPI in 1974 - CPI in 1973CPI in 1973
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

49.3 - 44.444.4
×
100
=
11%

Alternate Measurements of Inflation

The above data describe the CPI for all items. Also of note is the Core CPI, which measures inflation for all items except for the more volatile categories of food and energy. Core inflation averaged 8.30% per year between 1973 and 1974 (vs all-CPI inflation of 11.04%), for an inflation total of 8.30%.

When using the core inflation measurement, $1 in 1973 is equivalent in buying power to $1.08 in 1974, a difference of $0.08. Recall that for All Items, the converted amount is $1.11 with a difference of $0.11.

In 1973, core inflation was 3.48%.


Comparison to S&P 500 Index

To help put this inflation into perspective, if we had invested $1 in the S&P 500 index in 1973, our investment would be nominally worth approximately $0.66 in 1974. This is a return on investment of -33.93%, with an absolute return of $-0.34.

These numbers are not inflation adjusted, so they are considered nominal. In order to evaluate the real return on our investment, we must calculate the return with inflation taken into account.

The compounding effect of inflation would account for 9.94% of returns ($-0.03) during this period. This means the inflation-adjusted real return of our $1 investment is $-0.31.

Investment in S&P 500 Index, 1973-1974
Original Amount Final Amount Change
Nominal $1 $0.66 -33.93%
Real
Inflation Adjusted
$1 $-0.31 -30.56%


News headlines from 1973

Politics and news often influence economic performance. Here's what was happening at the time:

  • President Richard Nixon announces the end of the Vietnam War.
  • The longest war in American history finishes after William Rogers and Nguyen Duy Trinh of US and North Vietnam's army sign a cease-fire.
  • The IRA attacks London for the first time following the arrests of 10 of its members.
  • The Senate Watergate Committee begins its hearings.

Data Source & Citation

Raw data for these calculations comes from the Bureau of Labor Statistics' (CPI), established in 1913. Inflation data from 1665 to 1912 is sourced from a historical study conducted by political science professor Robert Sahr at Oregon State University.

You may use the following MLA citation for this page: “Inflation Rate in 1974 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 14 Nov. 2018, https://www.officialdata.org/inflation-rate-in-1974.

in2013dollars.com is a reference website maintained by the Official Data Foundation.


© 2018 Official Data Foundation / Alioth LLC. Contact