This inflationary episode was caused by a booming economy, which increased prices. Notably, in the post-Korean War years, when price controls were removed, inflation did not jump the way it did following World War II.

In addition, some consumer production shifted back to military material, and price controls were reinstated. Demand jumped as households-reminded of rationing and supply shortages during World War II-rushed to purchase goods. Prices had been declining in the months prior to the war because of a mild recession, but rebounded with the return to wartime status. The Korean War started in June 1950 and hostilities ceased in July 1953. According to the Bureau of Labor Statistics (BLS), the rapid post-war inflationary episode was caused by the elimination of price controls, supply shortages, and pent-up demand.

In 1947, inflation jumped to over 20 percent, as shown in Figure 1. Prices also surged after World War II ended. Milton Friedman and Anna Jacobson Schwartz (1980) observe that World War II ushered in a period of inflation comparable to the inflationary episodes that occurred during the Civil War and World War I. We first present a high-level overview of each of the previous six inflationary episodes and then turn our attention to the years following World War II-an episode that has strong similarities to what is occurring in the current environment. Since World War II, there have been six periods in which inflation-as measured by CPI-was 5 percent or higher. Figure 1 shows a time series of two commonly used measures of inflation: Consumer Price Index ( CPI) and Personal Consumption Expenditures ( PCE). In this blog post, we examine previous periods of heightened inflation and see what they can teach us about inflation in 2021. The combination of a spike in consumer demand and a supply chain that is not fully operational has contributed to rising prices. Similarly, total vehicle sales in April more than doubled from a year prior, which is leading to empty dealer lots. Travel demand, for example, has returned much more sharply than expected, which is straining airline operations. Elevated consumer demand is adding fuel to the fire. Economy-wide and retail-sector inventory-to-sales ratios have hit record lows homebuilders are reporting shortages of key materials and automakers do not have enough semiconductors.

Supply chain disruptions are having a substantial impact on current economic conditions.

Get Involved Show submenu for “Get Involved””īy Chair Cecilia Rouse, Jeffery Zhang, and Ernie Tedeschi.

The White House Show submenu for “The White House””.

Office of the United States Trade Representative.

Office of Science and Technology Policy.

Executive Offices Show submenu for “Executive Offices””.

Administration Show submenu for “Administration””.

Todays episode of the price is right