Rising Cost of Living

March 23, 1966

Report Outline
Debate Over Inflationary Pressures
Living Cost Trends Over 150 Years
Means of Controlling Living Costs
Special Focus

Debate Over Inflationary Pressures

Living costs in the United States rose faster in 1965 than they had in any year since 1958. The primary force behind the price advances on a wide range of consumer products and services was the war in Viet Nam, which placed heavy demands on the nation's financial and business structure. If the costs of that conflict mount in 1966 to the degree that seems likely, inflationary tendencies will become more pronounced and the value of the dollar may be further eroded. Economists of many different persuasions are already urging stronger counter-inflationary action, starting with an increase in federal personal and corporate taxes.

President Johnson has promised to act quickly in the field of taxation if the war-fueled boom threatens to get out of control. When he signed, March 15, a bill to increase revenues by $6 billion to help meet costs of the war in Viet Nam, the President said he could make “no prediction …on the need for additional taxes later this year,” but he added that the administration was “ready to act when action is needed.” Whatever the eventual decision on fiscal measures, the problem of living costs for consumers promises to figure strongly in the mid-term election campaign next autumn. Public opinion polls seem to confirm the belief of Republican leaders that the American people now view the prospect of inflation as the country's foremost domestic issue.

Recent Upward Movement of Price Indexes

Consumer prices rose at an average annual rate of only 1.2 per cent from 1960 to 1964 but at a rate of 2.0 per cent in 1965. In December 1965 alone, the Consumer Price Index jumped by four-tenths of one per cent —the largest December increase in 15 years. The one-month rise reflected higher prices for nearly all major goods and services, but food costs accounted for more than one-half of the total increase. With the Consumer Price Index standing at 111.0 (1957–59=100), it was costing the consumer $11.10 to buy the same “market basket” of goods and services that cost $10 in 1957–59.

ISSUE TRACKER for Related Reports
Cost of Living and Wages
Apr. 17, 2020  Inequality in America
Sep. 08, 2017  Universal Basic Income
Apr. 08, 2016  Future of the Middle Class
Apr. 18, 2014  Wealth and Inequality
Jan. 24, 2014  Minimum Wage
Jun. 19, 2009  Rethinking Retirement
Mar. 06, 2009  Middle-Class Squeeze
Mar. 14, 2008  Gender Pay Gap
Dec. 16, 2005  Minimum Wage
Sep. 27, 2002  Living-Wage Movement
Apr. 17, 1998  Income Inequality
Oct. 27, 1978  Wage-Price Controls
Jun. 16, 1978  Military Pay and Benefits
Mar. 23, 1966  Rising Cost of Living
Oct. 25, 1961  Price-Wage Restraints in National Emergencies
Jun. 21, 1961  Wage Policy in Recovery
Jun. 11, 1958  Prices and Wages in the Recession
Sep. 18, 1957  Control of Living Costs
Nov. 02, 1955  Wages, Prices, Profits
Jan. 26, 1954  Minimum Wage Raise
Jan. 02, 1954  Cost of Living
Jan. 21, 1953  Guaranteed Annual Wage
Dec. 17, 1952  Future of Price and Wage Controls
Nov. 19, 1951  Fringe Benefits and Wage Stabilization
Dec. 06, 1950  Wage Control
Jun. 13, 1949  Wages in Deflation
Jun. 04, 1947  Guarantees of Wages and Employment
Oct. 29, 1946  Decontrol of Wages
Dec. 01, 1945  Minimum Wages
Sep. 29, 1945  Wage Policy
Oct. 27, 1944  Wage Security
May 17, 1943  Incentive Wage Payments
Aug. 25, 1941  Prices, Profits, and Wage Control
Apr. 28, 1941  Wartime Changes in the Cost of Living
Sep. 21, 1940  Two Years of the Wage-Hour Law
Nov. 01, 1938  Industry and Labor Under the Wage-Hour Act
Jan. 20, 1938  Wage Rates and Workers' Incomes
Apr. 11, 1935  The Cost of Living in the United States
Sep. 01, 1930  Wages and the Cost of Living
May 24, 1930  The Anthracite Wage Agreement
Feb. 20, 1925  Measure of Recovery in Profits and Wages Since 1920–21 Depression