Skyrocketing inflation is taking an ever-bigger bite out of your paycheck
Making more money is great, but it doesn’t mean as much if you are having a harder time making ends meet.
Although wages are rising, the prices consumers must pay for goods and services are rising faster — notching a new 40-year high in February.
As a result, real inflation-adjusted average hourly earnings for the month fell 0.8%, contributing to a 2.6% decline from the year before, according to the BLS.
“Wages are up 5.1% over the past year, which is trailing the pace of inflation,” said Mark Hamrick, a senior economic analyst at Bankrate.com. “Indeed, surging prices are stealing the show on the minds of consumers.”
When wages rise at a slower pace than inflation, paychecks don’t go as far at the grocery store and at the gas pump — two areas of the budget that are getting particularly squeezed.
Household grocery bills swelled by 8.6% in the last 12 months, the largest jump since April 1981, according to the U.S. Department of Labor, while overall energy costs, including gasoline, are up the most since July 1981.
“It’s very difficult to fully evade inflation,” said Yiming Ma, an assistant finance professor at Columbia University Business School. “Certain types of spending can be postponed, but everyone needs to eat and everyone needs to go to work.”
“People do not buy food staples, gasoline or electricity because they love these things; they buy them because they need them,” Hamrick said.