Historical U.S. Inflation Rate by Year
U.S. inflation averaged 2.7% in 2025, well below the 40-year high of 8% in 2022 — but it has re-accelerated in 2026, reaching 4.2% in the 12 months to May 2026, the highest reading since early 2023. Measured by the Consumer Price Index (CPI), the rate is once again well above the Federal Reserve’s long-run 2% target.
Inflation is the rate at which prices rise, which means the purchasing power of a dollar falls. A 3% annual rate cuts what your money buys roughly in half over 24 years, so even “normal” inflation is a powerful reason to invest rather than hold cash.
U.S. inflation rate by year
Annual average CPI-U inflation, the most-cited measure of U.S. consumer inflation. Historical annual figures are final and do not change.
The 2026 figure is not yet a full-year average — the latest reading is 4.2% for the 12 months to May 2026, showing inflation turning back up after three years of decline.
| Year | Inflation rate | Note |
|---|---|---|
| 2026 (through May) | 4.2% | Re-accelerating; highest since 2023 |
| 2025 | 2.7% | Lowest since 2020 |
| 2024 | 2.9% | |
| 2023 | 4.1% | Falling from the peak |
| 2022 | 8% | 40-year high |
| 2021 | 4.7% | Post-pandemic surge |
| 2020 | 1.2% | Pandemic slowdown |
| 2019 | 1.8% | |
| 2018 | 2.4% | |
| 2017 | 2.1% | |
| 2016 | 1.3% | |
| 2015 | 0.1% | Oil-price collapse |
| 2014 | 1.6% | |
| 2013 | 1.5% | |
| 2012 | 2.1% | |
| 2011 | 3.2% | |
| 2010 | 1.6% |
What drives inflation
Inflation rises when demand outpaces supply or when the money supply grows faster than the economy. The 2021–2022 spike combined pandemic supply-chain shocks, strong consumer demand, and energy prices after the invasion of Ukraine.
The Federal Reserve fights high inflation by raising interest rates, which cools borrowing and spending. That is why mortgage, auto and credit-card rates climbed sharply in 2022–2023 as the Fed pushed inflation back down.
The 2026 pickup has been led largely by energy, which rose about 23.5% over the year to May 2026, alongside stubborn shelter costs. When energy prices swing, headline inflation can move quickly even while underlying “core” inflation stays calmer.
How to protect your money from inflation
Because cash loses value at the inflation rate, the classic defense is to own assets that historically outpace it — stocks, real estate, and inflation-protected bonds (TIPS or I-Bonds). Keeping only an emergency fund in cash and investing the rest is the standard approach.
Use the calculators below to see exactly how inflation erodes a fixed sum over time, and how investing at a real (after-inflation) return preserves your purchasing power.
What is the current U.S. inflation rate?
Inflation was 4.2% in the 12 months to May 2026 — its highest since early 2023 — after averaging 2.7% for full-year 2025. That is well above the Federal Reserve’s long-run target of about 2%, reflecting a renewed pickup led by energy prices.
What was the highest inflation in recent history?
Recent inflation peaked at 8.0% in 2022, the highest annual rate in about 40 years. The all-time modern high was 13.5% in 1980 before the Federal Reserve raised rates aggressively to break it.
How does inflation affect my savings?
Inflation lowers the purchasing power of cash. At 3% a year, $10,000 buys only about $7,400 of goods after 10 years, so money held in low-interest accounts quietly loses value even as the balance stays the same.
What is a good inflation rate?
The Federal Reserve targets about 2% a year. That is low enough to preserve purchasing power yet high enough to avoid deflation, which can stall an economy. Rates well above 2% erode savings faster.