Inflation is a metric that shows when prices increase more than value. For example, when the price of a gallon of milk goes from $3.50 to $4.00, that reflects inflation in milk prices. High inflation rates can be disastrous, but inflation rates in the low single digits have generally been part of robust economic growth. The problem, then, is to make sure inflation never gets too high.
Of all the economic numbers we’ve looked at so far, inflation is the most difficult to associate with presidential administrations, because there is a specific federal agency, the Federal Reserve, that is principally responsible for inflation. In 1913 the Federal Reserve was established to control monetary policy. Their job, in short, was to control interest rates to keep inflation in check while not causing a recession through excessively high rates. The president appoints the Chairman of the Federal Reserve, but the Chairman is not responsible to the president, and often serves multiple presidents. For example, Paul Volcker, the chairman of the Federal Reserve under Ronald Reagan, was appointed by Jimmy Carter, while Carter’s chairman, Arthur Burns, was appointed by Richard Nixon.
The US has never suffered catastrophic inflation like Europe did before World War II, but there have been three periods since 1913 when inflation rates were a significant economic concern: 1915-1920 where prices roughly doubled in five years, 1945-1947 (34% increase in three years) and 1972-1982 (131% increase in ten years). The next graph shows the presidential terms that cover the last two periods of significant inflation.
Source: Bureau of Labor Statistics www.bls.gov inflation calculator
From this graph, what stands out most is that Carter had a very bad time with inflation. Apart from Carter, only Truman’s first term and the Nixon/Ford era came even close. No other president, Democratic or Republican had any significant trouble with inflation. (It was brought under control early in Reagan's first tearm).
The above graphs show what happened to inflation each year during those periods. Truman had the highest inflation rate just after World War II, but managed to control it very quickly. The problem was much more persistent during the 1970’s, when four presidents: Nixon, Ford, Carter and Reagan struggled with it. Again, however, the person generally considered to have the most control over inflation is the Chairman of the Federal Reserve. From 1970 to 1977, that was Arthur Burns, who was appointed by Richard Nixon, and was generally concerned (as was Nixon) that taking harsh steps to quell inflation might increase unemployment.
Inflation was one of the most significant problems during the administration of Jimmy Carter, who appointed two Federal Reserve chairmen: George Miller and, less than two years later, Paul Volker. Miller is often blamed for shortsighted credit policies that aggravated inflation rather than controlling it, but Carter successfully moved him out of the Federal Reserve and appointed Paul Volker. Notably, Volker is generally given credit for bringing inflation under control, but most of his term occurred under Ronald Reagan.
The relative absence of inflation despite widely different economic policies is probably because the Federal Reserve usually puts the inflation rate beyond immediate political control. Also notable is that the inflationary periods had little corrolation with the level of debt or the deficit. Although the period of inflation under Truman occured during a high level of debt, it resolved while the debt was still nearly equal the GDP. Duing the 70's, when inflation was at it worst, the debt was at its lowest point as a proportion of GDP. Furthermore it resolved during the 80's in spite of a massive increase in the deficit and debt.