What is the highest inflation rate in US history?

Since the inception of the Consumer Price Index (CPI) in 1913, the highest recorded rate of inflation was 23.7% in June of 1920.

What is the average inflation rate of the last 50 years?

Over the past 50 years, the average rate of inflation has been 3.8%, with notable spikes in the 1970s and 2020s.

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Track how the U.S. inflation rate has changed over time, spending categories, and regions.

By Jack Caporal – Updated Oct 14, 2026 at 10:43 AM EST | Fact-checked by Parker Hicks

Key Points

September 2026 U.S. inflation at 3.7%, driven by 20.4% rise in energy prices.
Core inflation, which excludes food and energy, rose to 2.6%.
New England and the East South Central division -- the eastern half of the Midwest -- sees highest inflation rate at 4.3%.

Current U.S. inflation rate: 3.7% in September 2026

The 12-month rate of inflation as of August 2026 is 3.7%, according to the Bureau of Labor Statistics (BLS). Energy inflation spiked to 20.4% as the status of the Strait of Hormuz remains uncertain. Core inflation, which excludes energy and food, was 2.6%.

The Federal Reserve's inflation target is 2%.

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Energy inflation is driving overall inflation higher

Energy inflation is nearly ten times higher than overall inflation and largely explains why total inflation remains elevated. Gas prices are up 34.2%, versus 27.4% in August and down from 40.5% in May, according to BLS. A gallon of gas cost $4.48 on average in September, up from $4.20 in August, per BLS.

Energy prices -- and overall inflation -- have risen since February, after the conflict with Iran disrupted energy exports transiting the crucial Strait of Hormuz.

U.S. inflation rate by category: Energy, travel, and shelter costs remain elevated

Broken down by product, inflation in July wasn't uniform. A handful of categories, mostly related to energy, rose significantly compared to September 2025. This is the rate of inflation for select main categories as of September 2026:

All items: 3.7%
Food: 2.5%
Energy: 20.4%
Core: 2.6%
New vehicles: 0.6%
Used vehicles: -1.5%
Shelter: 3.2%
Airfare: 22.4%
Gasoline: 34.2%

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Energy continues to be the main driver of overall inflation and has a more direct impact on prices in fuel-reliant industries, such as airfare, costs for which are up 22.4% as carriers grapple with rising fuel costs, and gasoline, which is up 34.2%.

Shelter inflation, although not rising as quickly as energy, still remains above core inflation and the Fed's 2% target. Shelter and energy are difficult for consumers to substitute, making rising costs in those categories feel more acute than lower inflation in areas such as vehicles, a discretionary purchase.

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Inflation rate by U.S. region: Highest in the Middle Atlantic, lowest in the West South Central

BLS tracks average inflation in the four Census regions (Northeast, Midwest, South, West), and nine divisions. These have smaller samples and are more volatile than the national index. Inflation is highest in the Northeast and Midwest (4.2%), particularly the East North Central division, which covers the eastern half of the Midwest, and New England (4.3%). Inflation is lowest in the South and West (3.4%).

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Here's the 12-month rate of inflation by Census region for September 2026:

South: 3.4%
West: 3.4%
Midwest: 4.2%
Northeast: 4.2%

Here's the 12-month rate of inflation by BLS division for September 2026:

South Atlantic: 3.5%
Mountain: 3.3%
East North Central: 4.3%
New England: 4.3%
East South Central: 4.2%
Pacific: 3.5%
West North Central: 4.1%
Middle Atlantic: 4.2%
West South Central: 3.0%

From late 2013 until the end of 2020, inflation in the West tended to be higher than the national average by around 1%. Inflation in the South was higher than the national rate in the early 2020s, while the Northeast had lower inflation during the same period.

Analysis by the Federal Reserve Bank of Chicago found that house prices have historically been the main driver of regional differences in inflation.

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U.S. inflation rate by year

Over the last 20 years, the average inflation rate was 2.5%.

Inflation plummeted during the Great Recession, dropping from 5.6% in July 2008 to -2.1% a year later. Housing prices collapsed, banks tightened their lending standards after years of high-risk mortgage approvals, and unemployment skyrocketed. Consumer borrowing and spending declined, resulting in a brief period of deflation.

The inflation rate remained stable at around an average of 2% throughout the 2010s until the onset of the global pandemic in the spring of 2020. From January to May 2020, inflation went from 2.5% to 0.1%. With lockdown measures in place and widespread economic uncertainty, consumers reduced spending, leading to lower inflation.

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That period of low inflation didn't last long. In the spring of 2021, inflation rose rapidly, peaking at 9.1% in June 2022. Inflation remained above 5% until April 2023, driven by supply chain disruptions, shocks to the energy market driven by the Russia-Ukraine conflict, and strong consumer demand.

Since then, the average inflation rate has been 3.1%, above the Fed's 2% target, driven recently by global energy flows being choked by uncertainty over the critical Strait of Hormuz amid the Iran conflict.

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Why investors should keep an eye on inflation

Inflation has a significant impact on the stock market. When inflation rises faster than wages, consumer purchasing power declines. That can reduce spending and business activity.

In some cases, the Federal Reserve will raise interest rates to fight surging inflation, as it did in 2022. It then becomes more expensive for companies to borrow money, cutting into profits and potentially slowing expansion.

Stocks tend to perform best when inflation is around the Fed's 2% target. Here's the average annual return of the S&P 500 in different inflation environments.

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Data source: Bloomberg Finance (2023).
Inflation	Average S&P 500 Return (1-year rolling)
0%-2%	10.7%
2%-3%	13.8%
3%-5%	8.5%
Over 5%	2.4%

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Investors seeking to build a diversified portfolio may be interested in companies that have historically been insulated from inflation.

I-bonds are another option to consider to counter inflation. The Treasury Department sets rates for I bonds in May and November using CPI data from the previous six months. The current I bond rate is 4.26%, according to the Treasury Department. The November rate will reset based on CPI data collected in the six months prior.

3.7% inflation doesn't tell the whole story

Inflation remained level in September at 3.7%, but remains above the Fed's 2% target.

The headline inflation number hides how unevenly, and in some cases dramatically, prices are moving. Energy prices are 20.4% higher than a year ago, translating to higher prices at the pump and for airfare, and shelter costs are up 3.2%, further pinching consumers.

Location matters as well: BLS data suggest the average consumer in the West and South faces less intense inflation than those in the Northeast and Midwest.

Whether inflation feels like it's cooling or getting hotter depends not just on the national headline number but also on where someone lives and what they're buying.

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About the Author

Jack Caporal is the Research Director for The Motley Fool and Motley Fool Money. Jack leads efforts to identify and analyze trends shaping investing and personal financial decisions across the United States. His research has appeared in thousands of media outlets including Harvard Business Review, The New York Times, Bloomberg, and CNBC, and has been cited in congressional testimony. He previously covered business and economic trends as a reporter and policy analyst in Washington, D.C. He serves as Chair of the Trade Policy Committee at the World Trade Center in Denver, Colorado. He holds a B.A. degree in International Relations with a concentration in International Economics from Michigan State University.

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