CPI Ticks Up as Average Earnings Continue to Fall

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The Consumer Price Index rose 0.4 percent in August and at a 2.6 percent annualized rate over the last three months, according to the Bureau of Labor Statistics' latest reports on the consumer price, U.S. import/export price and producer price indexes. By contrast, the CPI rose at a 4.6 percent rate from February to May and at a 5.6 percent rate the three months before that.

Average real hourly earnings fell again in August, 2.0 percent from its peak in June 2010. Earnings have only increased by 0.7 percent in the last four years, which means it will take until sometime in 2062 to see an increase in real earnings of just 10 percent. As long as this slow growth in earnings remains along with weak job growth, there is no reason to expect much domestic price pressure.  Worldwide commodity prices and a falling dollar, however, may contribute to inflation—particularly in the short run.

For more, read our latest Prices Byte.