Average real earnings plunged 3.6% in past year as inflation made workers poorer

Inflation accelerated to an excruciating 9.1% for the 12 months ending in June, the highest level in four decades, according to the consumer price index report released on Wednesday. Hourly earnings have failed to keep pace.

“That’s just the byproduct of the fact that inflation is the highest in 40 years,” Bankrate Chief Financial Analyst Greg McBride said of the decline in real hourly earnings. “If you measure it in nominal dollars, wage growth is the best it’s been in years, but you would never know it because inflation is at a four-decade high, and otherwise robust gains in wages are being more than consumed by rising household costs.

Rising energy prices accounted for half the total inflation, with the gasoline index rising a whopping 59.9%. Republicans are hitting at President Joe Biden and Democrats for the high inflation and drawing a line between wages and increased prices to attack them.

Less money and less spending power.

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