History of Inflation in Timeline

Inflation, in economics, signifies a rise in the average prices of goods and services, quantified by a price index like the Consumer Price Index (CPI). As the general price level increases, the purchasing power of each unit of currency diminishes. Inflation rate, the common metric, is the annualized percentage change in a general price index. Deflation, conversely, represents a decrease in the general price level.

1922: Sources of Monetary Disorder

The book "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938" published in 2019, discusses monetary disorder from 1922-1938.

1936: Keynes' 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: Sources of Monetary Disorder

The book "Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder 1922–1938" published in 2019, discusses monetary disorder from 1922-1938.

1948: High-inflation episode in Nationalist China

Towards the end of the Nationalist Chinese government in 1948, there was a high-inflation episode in the country.

1949: High-inflation episode in Nationalist China

In 1949, there was a high-inflation episode towards the end of the Nationalist Chinese government.

1958: Phillips curve publication

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, becoming known as a Phillips curve.

1972: Wage and price controls by Richard Nixon

In 1972, Richard Nixon imposed wage and price controls, which were a notable failure.

1990: 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: Modern Phillips curve

Around the year 2000, a common view on inflation and its causes can be illustrated by a modern Phillips curve, including a role for supply shocks and inflation expectations.

January 2007: U.S. Consumer Price Index

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

2007: Inflation Rate in 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: Argentina criticised for manipulating economic data

Starting in 2007, 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.

January 2008: U.S. Consumer Price Index

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

2010: M2 money supply increase

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: M2 money supply increase

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: Argentina criticised for manipulating economic data

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

In 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 inflation

In November 2021, surveys of economists conducted by the University of Chicago Booth School of Business indicated that the global supply chain crisis would not contribute to a higher long-term inflation rate but that the combined effect of stimulative fiscal and monetary policies posed a risk of prolonged higher inflation.

December 2021: Jerome Powell on money supply and inflation

In December 2021, Fed chairman Jerome Powell stated that the once-strong link between the money supply and inflation "ended about 40 years ago."

2021: Inflation surge

Most countries experienced the 2021–2023 inflation surge, which is believed to be a mixture of demand and supply shocks.

January 2022: Economists' survey on inflation

In January 2022, surveys of economists conducted by the University of Chicago Booth School of Business indicated that the global supply chain crisis would not contribute to a higher long-term inflation rate but that the combined effect of stimulative fiscal and monetary policies posed a risk of prolonged higher inflation.

2022: Peak Inflation

Most countries experienced the 2021–2023 inflation surge, peaking in 2022.

2023: Denmark and Fixed Exchange Rate

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

2023: Inflation target in G7 countries

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: Inflation surge in the COVID pandemic

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: Declining Inflation

Most countries experienced the 2021–2023 inflation surge, peaking in 2022 and declining in 2023.

2024: Inflationary pressures

It was found that 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.