Executive Summary
The past decade of US inflation tells a story of two distinct eras. From 2015-2019, inflation remained remarkably stable, hovering near the Federal Reserve's 2% target. Then the COVID-19 pandemic triggered a historic surge that peaked at 9.1% in June 2022—the highest in 40 years.
As of November 2025, inflation has eased to 2.7%, approaching the Fed's target. However, cumulative price increases mean the price level is now 20%+ higher than in early 2020. Americans are paying more for everything—even as the rate of increase slows.
COVID-19 Pandemic Impact Disclaimer
The COVID-19 pandemic fundamentally disrupted global economics. Starting in March 2020, unprecedented government lockdowns, supply chain breakdowns, and massive fiscal stimulus created economic conditions unlike anything seen in modern history. According to the Peterson Institute for International Economics, COVID-era inflation was driven by a unique "trinity" of shocks:
- Demand shifts: Pandemic-related changes in consumer spending patterns, with goods demand surging while services collapsed
- Supply disruptions: Factory closures, shipping bottlenecks, and semiconductor shortages
- Policy response: Unprecedented fiscal stimulus ($5+ trillion in the US) and monetary easing
The Russia-Ukraine war (February 2022) then added the largest global commodity price surge in 40 years, particularly affecting energy and food prices. Any analysis of 2020-2024 inflation must account for these extraordinary circumstances.
10-Year Inflation Rate (2015-2025)
According to Bureau of Labor Statistics data, US inflation remained subdued from 2015-2019, then spiked dramatically during the pandemic recovery before gradually returning toward normal levels.
Annual Inflation Rate (CPI-U, Year-over-Year %)
| Year | Inflation Rate | Context |
|---|---|---|
| 2015 | 0.7% | Oil price collapse, strong dollar |
| 2016 | 2.1% | Stable growth |
| 2017 | 2.1% | Near Fed target |
| 2018 | 1.9% | Fed rate hikes begin |
| 2019 | 2.3% | Pre-pandemic stability |
| 2020 | 1.4% | COVID demand collapse |
| 2021 | 7.0% | Reopening surge, stimulus |
| 2022 | 6.5% | Peak in June at 9.1% |
| 2023 | 3.4% | Fed tightening takes hold |
| 2024 | 2.9% | Approaching target |
| 2025* | 2.7% | November reading; Oct data missing due to shutdown |
*2025 data as of November. Source: US Inflation Calculator using BLS data.
Pivotal Moments That Changed Inflation
Several key events dramatically altered the inflation trajectory over the past decade. Each represents a turning point in economic policy or external shocks.
US vs. G7 Countries: Economic Recovery Comparison
According to Brookings Institution and US Treasury analysis, the United States achieved the strongest post-pandemic economic recovery among G7 nations—but also experienced sharper inflation.
G7 Real GDP Growth vs. Q4 2019 (as of Q3 2024)
- 11.5% real GDP growth since Q4 2019
- Only G7 nation to exceed pre-pandemic trend
- Productivity growth outpaced all G7 peers
- Net energy exporter status provided cushion
- Aggressive fiscal stimulus ($5T+ total)
- Faster vaccine rollout than EU peers
- Energy independence (net exporter)
- Flexible labor markets adapted quickly
G7 Inflation Comparison (2022 Peak vs. Current)
Key Insight: US Inflation Lower Than European Peers
As of late 2024, the United States has the lowest harmonized headline inflation among all G7 economies. According to Treasury analysis, global energy shocks more strongly impacted inflation in Europe than in the United States due to Europe's dependence on Russian natural gas.
The Price Level Reality
While the inflation rate has fallen, Americans face a harsh reality: prices aren't going back down. The cumulative effect of 2021-2023 inflation means the overall price level is 20%+ higher than in early 2020.
Cumulative Price Level Change (Index: Jan 2020 = 100)
According to US Treasury, prices today are more than 10% higher than they would have been had inflation increased at its pre-pandemic trend rate. This "excess" price increase represents a permanent reduction in purchasing power for fixed-income households.
Federal Reserve Policy Response
The Federal Reserve executed the fastest rate-hiking cycle in 40 years to combat inflation. The Fed Funds rate went from 0-0.25% in March 2022 to 5.25-5.50% by July 2023.
Federal Funds Rate (2015-2025)
The "Soft Landing" Debate
Economists typically expect aggressive rate hikes to trigger a recession. Yet as of late 2025, unemployment remains near historic lows (~4%) while inflation has cooled significantly. This has led many analysts to declare a "soft landing"—a rare achievement in monetary policy history.
However, critics note that the price level damage is permanent, and real wages only recently recovered their 2020 purchasing power after years of losses.
Outlook: Where Inflation Goes From Here
According to Statista and IMF forecasts, G7 inflation rates are expected to continue moderating through 2026, with the US potentially reaching the Fed's 2% target.
- Supply chains largely normalized
- Energy prices stabilized
- Fed has room to cut rates further
- Labor market rebalancing
- Housing/rent inflation remains sticky
- Geopolitical shocks (tariffs, conflicts)
- Services inflation above target
- Fiscal deficit concerns
Bottom Line
Key Takeaways
- 2015-2019: Inflation stable near Fed's 2% target
- 2020-2022: COVID + stimulus + supply shocks drove historic inflation spike to 9.1%
- 2023-2025: Fed's aggressive rate hikes brought inflation back toward target (2.7% as of Nov 2025)
- Price level: Cumulative increase of 20%+ since 2020 is permanent—prices won't go back down
- G7 comparison: US achieved strongest recovery but also higher inflation; now has lowest G7 inflation rate
- Policy choice: The US chose aggressive fiscal stimulus, accepting temporary inflation for faster recovery—and it worked
The pandemic-era inflation surge was unprecedented but not unexplainable. It resulted from a unique combination of demand shifts, supply disruptions, massive fiscal stimulus, and external shocks. The US response prioritized rapid economic recovery over price stability—a gamble that appears to have paid off, as the economy has achieved a "soft landing" with strong growth and falling inflation.
However, the permanent increase in price levels means Americans must earn more just to maintain their 2020 standard of living. Real wages have only recently recovered, and housing affordability remains a crisis in many markets.