Key Takeaways
- Median 12-month result after a rise in inflation of at least 2 points within a year: +16.3%, against +6.0% for all months, a gap of 10.4 percentage points above the all-months median.
- Rose in the 12 months after 7 of 8 episodes (88%), compared with 61% of all months.
- Only 8 episodes have a full window, too few to separate a pattern from chance; read the table as a list of cases, not an estimate.
- The range was wide: -8.0% after March 2000 to +72.7% after October 1978.
- Median over 3 months +2.8% (all months +1.0%); over 36 months +40.5% (all months +14.5%).
- Episodes overlap with recessions, policy changes and valuation swings, so the record shows what followed, not what the trigger caused.
What the Historical Record Shows
An episode is counted in the month the year-over-year CPI inflation rate is at least 2 percentage points higher than it was 12 months earlier. After one is counted, the next is counted only once 12 months have passed without the condition, so a long spell is one episode. The data run from January 1971 to September 2026, and 8 episodes have a full 12-month window.
Rising inflation usually prompts central banks to tighten policy and lifts the yields investors demand, and it raises costs for companies faster than some of them can raise prices.
| After the trigger | Episodes | Median | Average | Rose | All months: median | All months: rose |
|---|---|---|---|---|---|---|
| 3 months | 8 | +2.8% | +4.8% | 5 of 8 | +1.0% | 54% |
| 12 months | 8 | +16.3% | +24.8% | 7 of 8 | +6.0% | 61% |
| 36 months | 8 | +40.5% | +45.3% | 7 of 8 | +14.5% | 66% |
The comparison column uses every month in the record, whether or not a trigger had occurred. Dropping any one episode moves the 12-month median between +10.1% and +22.6%.
Every Episode
| Month | What changed | 3 months later | 12 months later | 36 months later |
|---|---|---|---|---|
| April 2021 | inflation 0.3% to 4.2% | +2.7% | +10.1% | +32.4% |
| December 2009 | inflation 0.1% to 2.7% | -1.9% | +22.6% | +48.5% |
| October 2007 | inflation 1.3% to 3.5% | +17.9% | +6.9% | +77.7% |
| September 2005 | inflation 2.5% to 4.7% | +11.8% | +31.1% | +82.0% |
| March 2000 | inflation 1.7% to 3.8% | +0.0% | -8.0% | +19.2% |
| April 1987 | inflation 1.6% to 3.8% | +3.0% | +3.2% | -14.6% |
| October 1978 | inflation 6.4% to 8.9% | +0.0% | +72.7% | +93.0% |
| May 1973 | inflation 3.2% to 5.5% | +4.9% | +59.8% | +24.5% |
All 8 episodes, newest first. "Not yet" means the window has not finished.
Why the Result Differs From Episode to Episode
Gold is measured by the World Bank monthly average price in U.S. dollars, from 1971, when the dollar price stopped being fixed. It pays no income, so its result is price change alone.
Triggers and the S&P 500 series use monthly averages of daily closes, so results are read only at horizons of three months or longer, and the series before 1913 splice earlier price indexes and are less precise. Results are nominal, before inflation, taxes and fees, and use the reference month of each statistic: inflation and unemployment figures were published after the month ended, so an investor reacting to the release would have started a few weeks later.
Triggers rarely occur alone. An inflation rise, a rate rise and a valuation fall can all begin within the same year, and a recession can start before or after any of them, so each episode mixes several influences and the average hides how different the individual cases were.
What to Watch
The indicators that define or accompany this trigger:
- CPI: Latest Reading, Historical Chart, Release Date & Investor Guide
- Core PCE: Latest Reading, Historical Chart, Release Date & Investor Guide
- 10-Year Breakeven Inflation: Latest Reading, Historical Chart, Release Date & Investor Guide
- Fed Funds Target Range: Latest Reading, Historical Chart, Release Date & Investor Guide
- 10-Year Real Yield: Latest Reading, Historical Chart, Release Date & Investor Guide
Frequently Asked Questions
What happened after the most recent episode?
The most recent episode with a full 12-month window began in April 2021 (inflation 0.3% to 4.2%). Over the next 12 months, gold (the World Bank monthly average price in dollars) changed by +10.1%, against a median of +6.0% across all months.
How often did the gold price rise in the 12 months after a rise in inflation of at least 2 points within a year?
In 7 of 8 episodes (88%). Across all months since 1971, 61% of 12-month windows rose.
Is this a reliable signal for investing?
The record does not support treating it as one. The 12-month results ranged from -8.0% to +72.7%. Dropping any one episode moves the 12-month median between +10.1% and +22.6%. The episodes also overlap with other events that move markets. It describes what followed in the past, not what will follow.
How is the result measured?
An episode is counted in the month the year-over-year CPI inflation rate is at least 2 percentage points higher than it was 12 months earlier; the next is counted only after 12 months without the condition. Forward results are measured from that month over 3, 12 and 36 months using gold (the World Bank monthly average price in dollars). Triggers and the S&P 500 series use monthly averages of daily closes, so results are read only at horizons of three months or longer, and the series before 1913 splice earlier price indexes and are less precise. Results are nominal, before inflation, taxes and fees, and use the reference month of each statistic: inflation and unemployment figures were published after the month ended, so an investor reacting to the release would have started a few weeks later.