Real earnings plunge 3.6% in past year as inflation continues to outpace expectations;

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Soaring inflation means that workers’ real earnings are falling at the fastest rate in decades.

Inflation accelerated to an excruciating 9.1% for the 12 months ending in June, the highest level in four decades, according to the consumer price index report released on Wednesday. Hourly earnings have failed to keep pace.

As a result, inflation-adjusted hourly earnings decreased by 1% from May to June alone, according to the Bureau of Labor Statistics. In the past year, from last June to this June, the hourly earnings of workers declined by 3.6%.

Real average weekly earnings declined by 4.4% given that employees, on average, are working for nearly 1% less time than a year ago.

Put simply, wage growth is not enough to buffer consumers from the 9.1% inflation. Workers are getting paid more dollars than a year ago, but they are also being forced to spend much more of that money to purchase the same goods they did last year.

“That’s just the byproduct of the fact that inflation is the highest in 40 years,” Bankrate Chief Financial Analyst Greg McBride said of the decline in real hourly earnings. “If you measure it in nominal dollars, wage growth is the best it’s been in years, but you would never know it because inflation is at a four-decade high, and otherwise robust gains in wages are being more than consumed by rising household costs.”

McBride said that wage moderation or increases will be “entirely contingent” upon when inflation starts to cool down. The higher prices are straining household budgets, especially those of lower- and moderate-income households, he noted.

Rising energy prices accounted for half the total inflation, with the gasoline index rising a whopping 59.9%.

So-called core CPI, which strips out volatile food and energy prices, increased 5.9% — still much higher than the Federal Reserve’s target of 2% inflation.

Republicans are hitting at President Joe Biden and Democrats for the high inflation and drawing a line between wages and increased prices to attack them.

“This is insanity. There is no end in sight for families struggling with their wages and livelihoods being wiped out by Biden-flation. Everyone feels the cost of Biden and Democrats’ reckless spending as Americans strain to afford gas and groceries,” said Republican National Committee Chairwoman Ronna McDaniel after Wednesday’s report.

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