The inflation rate for the last 12 months was 0.9%, and has varied from 0.1% to 3.2% over the past 5 years. [1]  So, no, inflation is not responsible for the higher valuations.<p>Higher valuations come partly from businesses having more cash because they are not spending money expanding, and because the low interest rates encourage companies to borrow money to buy back stock, which increases EPS and dividends, which increases share prices.  Of course, there has been some legitimate growth over the past years, too.<p>[1]  <a href="http:&#x2F;&#x2F;www.usinflationcalculator.com&#x2F;inflation&#x2F;current-inflation-rates&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.usinflationcalculator.com&#x2F;inflation&#x2F;current-infla...</a>