Inflation: How the cost of gas, McDonald's Big Mac has changed over the years

Yahoo Finance's Jared Blikre breaks down gas prices through the years as well as how the price of a McDonald's Big Mac has changed.

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JULIE HYMAN: Yahoo Finance's Jared Blikre turning back the clock to an era of gas lines, muscle cars, and wood paneling in today's Then and Now. Jared, compare different eras for us.

JARED BLIKRE: Yes, I think it makes Sozzi drool over there, but yes, it is time to talk inflation, Julie, just as we're now facing soaring gas prices. 50 years ago, Americans were beginning a decade where high prices would lead to price controls and also gas shortages that would leave motorists in line for hours, waiting for a few gallons of unleaded, or leaded, as the case would be. You could buy that back then.

But before inflation truly became runaway later in the decade, prices were looking pretty attractive around the time President Nixon closed the gold window in 1972. Though gas prices, gas was $0.59 per gallon, as you can see right here. It seems pretty cheap compared to your local Speedway or Valero.

But five decades of inflation have compounded the erosion of the US dollar. Much like compounding interest works in favor of an investor, a la Warren Buffett, it works to the detriment of cash holders. So adjusted for inflation, that $0.59 becomes the modern equivalent of $3.40, not quite as attractive.

And in fact, one other interesting thing here is that in 2008, prices spiked to $4.11. And in today's dollars, that's $5.42, which is above the current national average of $4.33. But of course, we know that prices are almost double that in some parts of California right now. Ouch. So interestingly, if we take a look at gas prices, going back to 1929, prices trended lower for the most part, at least in terms of purchasing power. That would be the green line right here, starting at 1929, all the way through to 1970.

You can see the prices went from about $2.60 to $1.60. Then came the oil shocks of the 1970s. First, the 1973 oil embargo by Arab Emirates, the Arab members of OPEC, and later in 1979, an energy crisis would erupt, surrounding the Iranian revolution. So bottom line, prices surged to over a buck for the first time in 1980. That's the real price right here of $1. Now, net, net, I mean, we do find ourselves at $4 per gallon today, but we've seen some incredible fluctuations, not the least of which is including the lead-up to the global financial crisis.

Now we've got to switch gears now to the other great human want, and that would be food-- specifically, Big Macs. The iconic McDonald's burger was actually invented by a Pittsburgh area franchisee. Back in the day, two all-beef patties and special sauce would set you back a whopping $0.65. But when you adjust for purchasing power, as we've been doing, that comes to $4.75 in modern money.

So while price is nominal-- well, the price in nominal dollars and cents-- would trend higher, reaching into the mid $2 range during the aughts, in today's dollar, the price actually dipped below $4. And you can see that right on the screen there. So no matter how you slice it, le Big Mac, as they're called in Paris, have never been pricier in the US. They are now fetching $5.81.

Blame soaring input prices from wheat to mayo to beef, plus higher prices for workers on the line. And the only thing potentially keeping gas and burger prices from shooting to double digits, Julie and Brian, might just be Jerome Powell and the Fed with a double dose of interest rate hikes in May. 50 basis points--

JULIE HYMAN: Yeah, because people don't--

JARED BLIKRE: All come back the same.

JULIE HYMAN: Yeah, I mean, it doesn't seem like that people are pushing back against these prices yet. So to put a fine point on it here, in today's dollars, gasoline has actually been higher in the past, but the Big Mac has not.

JARED BLIKRE: Yeah, really interesting. And you think about gas prices. I remember back in my youth, scrounging around for quarters in the seats of my car. You could actually buy $1 of gas, and that would get you about 20 miles. I think that was what my car was getting back then, whopping 20 miles per gallon. Yeah, I think when you think about it in terms of food prices, we're all feeling it right now, guys.

JULIE HYMAN: Yeah, definitely we are. All right. Ay-yai-yai. I'm just, like, processing this time warp here.