Americans’ real wages continued to decline during the month of September.
Bureau of Labor Statistics data confirm that inflation is outpacing wage growth — implying a lower purchasing power for American workers. As The Daily Wire previously reported, the decline in real wages has been continuing through most of 2021.
The consumer price index rose 5.4% in September from a year ago, the Labor Department said Wednesday, up slightly from August’s gain of 5.3% and matching the increases in June and July, which were the highest since 2008. Excluding the volatile food and energy categories, core inflation rose 0.2% in September and 4% compared with a year ago. Core prices hit a three-decade high of 4.5% in June.
Higher prices are also outstripping the pay gains many workers are able to obtain from businesses, who are having to pay more to attract employees. Average hourly wages rose 4.6% in September from a year earlier, a healthy increase, but not enough to keep up with inflation.
Treasury Secretary Janet Yellen predicts that inflation will continue into next year.
“When do you expect the inflation to get back to the 2 percent range, which is considered normal?” CNN anchor Jake Tapper asked her. “2022? 2023? When?”
“Well, I expect that to happen next year,” Yellen responded. “Monthly rates of inflation have already fallen substantially from the very high rates that we saw in the spring and early summer. On a twelve-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement by the end of — by the middle to end of next year, second half of next year.”
Yellen noted, “we are going through a period of inflation that’s higher than Americans have seen in a long time.”
Economists polled by The Wall Street Journal concur that inflation will remain high. From WSJ:
Consumer-price inflation will drop to 3.4% by June of next year, then 2.6% by the end of 2022, according to respondents’ average estimates. That is still above the average 1.8% that prevailed in the decade before the pandemic.
“Consumer spending, and by extension GDP growth, is being limited by high rates of inflation eroding the real purchasing power of consumers,” Visa economist Michael Brown told the outlet.
As The New York Times explains, the cost of a Thanksgiving meal will be “the most expensive meal in the history of the holiday.” Prices for cereal and bakery products are up by 2.7% year-over-year; the same is true of produce and nonalcoholic beverages, which have increased in price by 3% and 3.7% respectively.
Turkey production may fall by 1.4% since last year, likely due to the high price of corn used to feed the animals.
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