Rising wages erased by faster-than-expected inflation, study shows
Recent data reveal that the modest pay gains many workers received over the past two years have been completely offset by a surge in consumer prices.
Federal statistics show the average hourly wage reached $37.81 in the most recent month, a level that mirrors the inflation-adjusted $35.84 recorded in January 2025. Meanwhile, the September CPI rose 3.7% from a year earlier, exceeding the 3.6% expected by analysts and surpassing August's 3.4% gain. Economists at BNP Paribas called the figure evidence of persistent inflation, while Navy Federal Credit Union’s chief economist Heather Long linked the erosion of wage gains to the war in Iran and rising fuel costs.
The University of Michigan’s consumer sentiment index fell to 46.3 in October, reflecting growing cost-of-living concerns. Although weekly earnings have risen due to longer work hours, the White House highlighted that annual earnings for private-sector workers have increased by more than $600 under President Trump.
Why it matters
Inflation erasing wage gains tightens household budgets and could shape upcoming midterm election debates.
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