(Source: www.zengernews.com) – Only low-wage workers seeing pay rise faster than rate of inflation – Inflation shot up again in November as prices increased at their highest rate since the 1980s, as the costs for housing grew at a record pace and prices for food and energy remain high.
The U.S. Bureau of Labor Statistics’ Consumer Price Index showed that the prices of goods and services in the U.S. economy rose 0.8 percent in November, marking another consecutive month inflation has grown.
As inflation continues to grow, it’s having a disproportionate impact on low-wage earners, several economists noted.
Housing prices have been particularly high and helping push up inflation numbers, noted Charlie Biello, founder and CEO of Compound Capital Advisors.
“The shelter component is the biggest part of CPI at 33 percent of the index and is being wildly understated with rents up 17.7 percent over the last year and home prices up nearly 20 percent,” Biello wrote on Twitter, adding that the year-over-year rise in rents and home prices is the largest ever recorded.
Harvard University Economics Professor Jason Furman agreed that inflation was rising rapidly, even taking into account price shifts associated with the pandemic. The November inflation report continues a trend of rising inflation, with prices rising more than 0.5 percent from March through July.
Furman wrote that he expected some prices to fall in upcoming months, especially gasoline, which was 6.1 percent higher in November, and used cars, which were 2.5 percent more expensive for the month. He put the latest inflation numbers against recent reports on wages, which have also been rising.
“Much better for lower-wage workers. The bottom quarter of workers have seen wage gains outpace inflation but by less than before. The second quartile had been positive but has now turned negative,” Furman wrote following the Dec. 10 report. The highest 50 percent of wage earners all saw inflation overtake wage gains, he said.
In its November 2021 jobs report, released on Dec. 3, the Bureau of Labor Statistics reported that hourly wages rose an average of eight cents during the month, bringing the average to $31.03, a 4.6 percent jump from last year.
The Peterson Institute of International Economics said that wage growth was even stronger than pre-pandemic forecasts, outpacing trends by 1.4 percent.
Another thorny issue for the economy is rising energy prices.
Gasoline saw the highest gains of any goods or product in November, rising 58 percent. Rental cars are up 37 percent, used cars are up 31 percent, hotels prices were 26 percent higher and utilities were up 25 percent Food prices also shot up, with steaks jumping 25 percent in price in November, bacon rising 21 percent and pork up 17 percent.
Of the 6.8 percent total growth in inflation over the last year, 2 percent can be attributed to higher energy prices, namely for gasoline, according to the White House Council of Economic Advisers.
Diane Swonk, chief economist at Grant Thornton, said that prices at the pump are up nearly 60 percent from a year ago, and there are few options to attack inflation in this sector.
“These are the prices that worry consumers most but the Federal Reserve is limited in reducing,” Swonk wrote on Twitter.
The latest inflation numbers come days before the Federal Reserve Board of Governors is set to meet and consider how to end measures that helped shore up U.S. markets during the pandemic lockdowns, but are also likely contributing to U.S. inflation.
“The Fed’s goal is to see inflation come down to levels that are insignificant, which will require them to more forcefully reign in demand,” Swonk wrote on Twitter ahead of the Dec. 14-15 meeting of the Federal Reserve Board of Governors.
Edited by Bryan Wilkes and Kristen Butler