Image copyright: Mornick 2017
A tale of rising inflation, stagnating wages and pricey gas
Last week, the Labor Department announced that the U.S. inflation rate had climbed to 8.5 percent in March, the highest in forty years. March's rate is the seventh consecutive month the consumer price index – which measures consumers' prices for goods and services – has shot up.
Rising inflation is usually underpinned by strong consumer demand. That notwithstanding, if left unchecked, rising inflation would leave workers worse off, especially when there is no commensurate increase in wages.
The pandemic's impact on the economy still lingers with supply chain disruptions making sure demand is unmet – driving up prices. Even as one considers these factors fueling inflation, it is worth noting that the rate of wage increases trended upwards as the pandemic hit.
Prices of goods and services have been on steady rise
source: tradingeconomics.com
In New York City, one of the country's biggest economies, data provided by the Labour Department showed that the overall average increase in wages in 2020, 3.32 percent, was the highest since 2007.
Perhaps, this provides a glimpse of consumers' strong demand responsible for a strong consumer demand post-2020. While wage increases fell to 2.69 percent in 2021, it remained at a ten-year high.
