The tightest labor market in decades is fueling rapid wage growth for millions of Americans, but sky-high inflation is quickly eroding those gains.
The Labor Department reported on Wednesday that average hourly earnings for all employees actually declined 2.6% in April from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings dropped 0.1% in March, when accounting for the inflation spike.
By that measure, the typical U.S. worker is actually worse off today than they were a year ago, even though nominal wages are rising at the fastest pace in years. That’s because consumers are confronting the highest inflation in a generation, which has quickly diminished their purchasing power.
The head of major supermarket Tesco has warned that people in the UK are facing “real food poverty for the first time in a generation”.
The warning of “real food poverty” comes as many in the country struggle with the increasing costs of food and fuel due to inflation, with a former chief economist for the Bank of England warning that such inflationary conditions inflicting pain on everyday people could continue for years.
According to a report by The Times, the head of the supermarket giant Tesco, John Allan, has said that many of those who visit his stores are now seriously struggling to make ends meet.
“I was in some stores on Friday and I was hearing for the first time for many years of customers saying to checkout staff ‘Stop when you get to £40, I don’t want to spend a penny over that’,” the publication reports the grocery tsar as saying.
Federal Reserve Bank of St. Louis President James Bullard said that high readings on inflation still concern central bank officials, reinforcing the need for higher interest rates.
“Inflation is broader and more persistent than many have thought and the Fed will have to act in order to keep inflation under control and we’ve got a plan in place,” Bullard told Yahoo Finance in an exclusive interview on Wednesday.
The Bureau of Labor Statistics reported Wednesday morning that prices in the United States rose by 8.3% between April of this year and April of last year. That yearly pace of growth in the Consumer Price Index is a tick down from the 8.5% pace observed in March, but Bullard emphasized that more action from the Fed will be needed to further push inflation down.