How Much Have Everyday Prices Risen Since 2020? A Market Analogist's Guide

The core investor question is simple: how much have everyday prices risen since the pandemic began? The answer, based on the latest data, is a 2.7% increase in the Consumer Price Index over the 12 months ending in November 2025. This figure, while a significant decline from the peak above 9% seen in 2022, reveals a persistent and structural shift in inflation that continues to pressure household budgets.

The pandemic's direct effects are waning, but its legacy is embedded in the service sector. The most telling category is food-away-from-home, where prices have climbed 3.7 percent over the last year. This reflects the lasting impact on restaurant labor and supply chain costs, a pressure that has proven more durable than the commodity-driven spikes in energy and groceries. Shelter costs, another critical service, are up 3.0 percent over the last 12 months, showing that housing inflation, while moderating, remains a key driver of the overall index.

To put this in historical context, the current pace of inflation is a fraction of the 1970s. Then, the combination of oil shocks and wage-price spirals pushed annual CPI increases into double digits for years. Today's 2.7% rise is a sign of disinflation, not a repeat of that era. However, the structural nature of the pressure is similar. Just as the 1970s saw service inflation outpace goods, today's persistent pressures are concentrated in areas like shelter and dining, where costs are sticky and less responsive to monetary policy.

The bottom line is that the pandemic triggered a permanent recalibration of relative prices. While headline inflation has cooled, the core pressures in services remain. For investors, this means the era of easy, broad-based disinflation is over. The focus shifts to companies that can pass on these service-sector costs to consumers, a dynamic that will shape corporate earnings and consumer spending for years to come.

The 1970s Lens: Comparing Magnitudes and Drivers

The recent inflation surge has drawn inevitable comparisons to the 1970s. The structural parallels are real: supply shocks, accommodative policy, and a spike in headline prices. Yet, the magnitude and underlying drivers point to a fundamentally distinct episode.

The most critical difference is central bank credibility. Today's institutions operate under explicit inflation targets and have a credible track record of achieving them. This is a direct lesson from the 1970s, where a "passive" monetary stance and multiple competing mandates allowed inflation to spiral for over a decade. The modern Fed is acutely aware of the price-wage spiral risk, as evidenced by its focus on inflation expectations. This institutional memory drastically reduces the odds of a prolonged, self-reinforcing inflationary period.

The scale of the commodity shock also matters. The oil price jumps that fueled 1970s stagflation were far more severe. In real terms, oil prices are still only around two-thirds of those in 1980 or 2008. This limits the direct, economy-wide inflationary shock we are seeing today. The current surge is more contained, a consequence of specific, albeit severe, disruptions rather than a systemic, multi-year energy price war.

Finally, the economy's composition has shifted. The 1970s were driven by a manufacturing-based multiplier effect, where growth in one sector rapidly pulled up others. Today's economy is primarily services-based, which has a much lower inflationary impact per unit of growth. This structural change acts as a natural dampener on inflationary pressures, making it harder for a supply shock to trigger the broad-based price acceleration seen in the past.

Put differently, the 1970s were a systemic failure of policy and a structural economic model. The current episode is a cyclical shock amplified by unprecedented fiscal and monetary responses to a global pandemic. The guardrails are stronger, the shocks are smaller, and the economic engine is different. This isn't a repeat; it's a different kind of inflationary episode, one that is more likely to be resolved by policy and supply chain healing than by a decade of economic pain.

Forward Implications: Disinflation Path and Remaining Risks

The disinflation path is clear but incomplete. The core CPI, which strips out volatile food and energy, rose 2.6 percent over the last 12 months. This marks a significant moderation from the peaks of 2022 and 2023, suggesting underlying pressures are easing. However, it remains well above the pre-pandemic norm of around 2%, indicating the process is far from finished. The real test is whether this moderation broadens across the economy or stalls in key service sectors.

The primary risk is not a single shock, but a systemic failure of expectations. The current episode shares a critical difference with the 1970s: central banks now have explicit inflation targets and a track record of credibility. The danger is that repeated inflationary jolts and a prolonged period of elevated inflation could eventually de-anchor expectations. This would be a critical failure mode not present in the 1970s, where monetary policy was more passive. If workers and businesses begin to expect higher inflation, wage and price-setting behavior could become self-reinforcing, trapping the economy in a higher inflation regime.

For investors, the key signals to monitor are the gaps between headline and core inflation, and the behavior of service-sector prices.

The recent data shows shelter inflation, a major component of core CPI, rising 3.0 percent over the last year. Medical care services also showed persistent pressure. A broadening of disinflation would require these service costs to slow meaningfully. If they remain sticky, the core CPI will struggle to fall toward target, prolonging the period of high nominal interest rates and increasing the risk of a policy error. The path forward is one of careful monitoring, where the stability of expectations is as important as the level of the headline number.

Investment Guardrails: What to Watch Next

The disinflation thesis is not a passive forecast; it is a bet on the Federal Reserve's ability to maintain control. The key catalyst to monitor is the central bank's reaction function. If inflation expectations become unanchored, the Fed may need to raise rates more than currently priced, directly pressuring asset valuations. The market's current optimism assumes a smooth glide path back to target, but history shows the Fed's delayed recognition of inflation's persistence can trigger a steeper tightening cycle.

The 1970s offer a stark structural comparison. Then, the Fed's "passive" stance, initially diagnosing inflation as transitory, led to a multi-decade spiral. Today's central banks have clearer mandates and a track record of credibility. However, the initial misdiagnosis of the pandemic surge as temporary had a similar consequence. It took more than six months for the Fed to abandon the term, launching a steepest and fastest tightening cycle in its history, increasing policy rates by 5.25 percentage points over just 16 months. This lag created a policy overhang that investors must now watch for recurrence.

The guardrail is the inflation data itself. The recent commodity price surge triggered by Russia's invasion of Ukraine will raise inflation further in 2022. Model forecasts suggest global inflation could rise to almost 10% later this year before it starts declining. This is the precise kind of persistent shock that tests central bank resolve. The bottom line is that the disinflation story depends on a Fed that learns from its own past mistakes and acts decisively at the first sign of a wage-price spiral, not after the fact.