History of Inflation in Timeline

Inflation, in economics, signifies a rise in the average price level of goods and services within an economy, effectively reducing the purchasing power of money. It's commonly measured using a price index like the Consumer Price Index (CPI). A higher inflation rate means each unit of currency can buy fewer goods. Deflation is the opposite, representing a decrease in the general price level. The inflation rate, the annualized percentage change in a general price index, is the standard metric for quantifying inflation.

1922: Publication of "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938"

In 1922, monetary historians Thomas M. Humphrey and Richard Timberlake published "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938".

1936: Publication of "The General Theory of Employment, Interest and Money"

In 1936, John Maynard Keynes emphasized in his main work "The General Theory of Employment, Interest and Money" that wages and prices were sticky in the short run, but gradually responded to aggregate demand shocks.

The General Theory of Employment, Interest and Money: With the Economic Consequences of the Peace (Classics of World Literature)

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1938: Publication of "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938"

In 1938, monetary historians Thomas M. Humphrey and Richard Timberlake published "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938".

1948: High-inflation episodes in Nationalist China

In 1948, Nationalist China experienced a high-inflation episode.

1949: High-inflation episodes in Nationalist China

In 1949, Nationalist China experienced a high-inflation episode.

1958: Phillips publishes evidence of a negative relation between inflation and unemployment

In 1958, Alban William Phillips published indirect evidence of a negative relation between inflation and unemployment, confirming the Keynesian emphasis on a positive correlation between increases in real output and rising prices.

1972: Wage and price controls by Richard Nixon

In 1972, Richard Nixon imposed wage and price controls.

1990: Direct inflation targeting in New Zealand

From its first inception in New Zealand in 1990, direct inflation targeting as a monetary policy strategy has spread to become prevalent among developed countries.

1990: New Zealand adopts inflation target

In 1990, New Zealand adopted an official inflation target as the basis of its monetary policy, continually adjusting interest rates to steer the country's inflation rate towards its official target.

2000: Common view on inflation

Around the year 2000, a common view began to emerge regarding inflation and its causes. This view is illustrated by a modern Phillips curve, which includes a role for supply shocks and inflation expectations alongside the original role of aggregate demand in influencing the inflation rate.

January 2007: U.S. Consumer Price Index

In January 2007, the U.S. Consumer Price Index (CPI) was 202.416.

2007: Inflation rate for the CPI

In 2007, the resulting inflation rate for the CPI in this one-year period is 4.28%, meaning the general level of prices for typical U.S. consumers rose by approximately four percent.

2007: Criticism of Argentina's government

Starting in 2007, during the presidency of Cristina Kirchner, the government of Argentina was criticised for manipulating economic data, such as inflation.

January 2008: U.S. Consumer Price Index

In January 2008, the U.S. Consumer Price Index (CPI) was 211.080.

2010: Increase in the M2 money supply

From 2010 through 2015, the broadest measure of money supply, M2, increased about 45%, far faster than GDP growth, yet the inflation rate declined during that period.

2015: Increase in the M2 money supply

From 2010 through 2015, the broadest measure of money supply, M2, increased about 45%, far faster than GDP growth, yet the inflation rate declined during that period.

2015: Criticism of Argentina's government

Until 2015, during the presidency of Cristina Kirchner, the government of Argentina was criticised for manipulating economic data, such as inflation and GDP figures, for political gain and to reduce payments on its inflation-indexed debt.

October 2018: Hyperinflation in Venezuela

As of October 2018, Venezuela experienced the highest hyperinflation in the world, with an annual inflation rate of 833,997%.

2019: Publication of "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938"

In 2019, monetary historians Thomas M. Humphrey and Richard Timberlake published "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938".

November 2021: Economists' survey on the global supply chain crisis

In November 2021, a survey of economists conducted by the University of Chicago Booth School of Business showed that more economists agreed than disagreed that the global supply chain crisis would not contribute to a higher long-term inflation rate above the Federal Reserve's inflation target.

December 2021: Jerome Powell on the money supply

In December 2021, Fed chairman Jerome Powell said that the once-strong link between the money supply and inflation "ended about 40 years ago," due to financial innovations and deregulation.

2021: Start of the 2021-2023 inflation surge

In 2021, most countries experienced the 2021–2023 inflation surge. The causes are believed to be a mixture of demand and supply shocks, whereas inflation expectations generally remained anchored.

January 2022: Economists' survey on the global supply chain crisis

In January 2022, a survey of economists conducted by the University of Chicago Booth School of Business showed that more economists agreed than disagreed that the combined effect of the stimulative fiscal and monetary policies being implemented in the United States posed a risk of prolonged higher inflation.

2022: Peak of the 2021-2023 inflation surge

In 2022, most countries experienced the 2021–2023 inflation surge, peaking this year. The causes are believed to be a mixture of demand and supply shocks, whereas inflation expectations generally remained anchored.

2023: Denmark maintains a fixed exchange rate

As of 2023, Denmark is the only OECD country which maintains a fixed exchange rate (against the euro).

2023: Central banks following an inflation target

As of 2023, the central banks of all G7 member countries can be said to follow an inflation target, including the European Central Bank and the Federal Reserve.

2023: Link between money supply growth and the 2021-2023 inflation surge

During the COVID pandemic and its immediate aftermath, the M2 money supply increased at the fastest rate in decades, leading some to link the growth to the 2021-2023 inflation surge.

2023: Decline of the 2021-2023 inflation surge

In 2023, most countries experienced the 2021–2023 inflation surge, declining this year. The causes are believed to be a mixture of demand and supply shocks, whereas inflation expectations generally remained anchored.

2024: Household purchasing power loss due to government debt

In the short run, a permanent 1 percent of GDP increase in the primary deficit leads, after five years, to inflationary pressures equivalent to a $300–$1,250 loss in household purchasing power per household in 2024 dollars.