Earlier today, the Bureau of Labor Statistics (BLS) released the newest update on inflation for the month of October. According to the new numbers, over-the-year inflation, i.e., October 2020 to October 2021, prices were up by 6.2 percent. This is “the largest 12-month increase since the period ending November 1990.”
When it comes to over-the-month changes, between September and October prices were up by 0.9 percent, more than two times the rise in September of 0.4 percent. Food, energy, used cars and shelter were among the biggest drivers for the increasing price index.
Real wages declined
While price levels increased 0.9 percent in October, wages were only up by 0.4 percent. In other words, despite the nominal wage gains that Americans experienced, real wages declined due to the high inflation. In October, Americans saw real wages decline by 0.5 percent, and over-the-year real wages declined by 1.2 percent, according to the BLS.
Essentially, what looked like wage gains have turned out to be the opposite. Inflation, quite to the contrary of what the media has portrayed, has not been good for people’s wages. Inflation is eating into people’s money, thereby slowly eroding Americans’ purchasing power.
It does not bode well for Americans that the Biden administration’s plans for the country hinge on pouring even more money into the economy.