Consumer inflation in the U.S. has slowed its pace but is remains well-above its long-time average, leaving workers’ pay raises still trailing rising costs.
The Consumer Price Index (CPI) for all items rose 7.7 percent for the 12 months ending in October, before seasonal adjustment, down from the 8.2-percent increase for the year over year period ending in September and a notable decrease from the 9.1-percent high notched for the period ending in June, the U.S. Bureau of Labor Statistics (BLS) reported on Nov. 10.
The inflation rate remains significantly above its multiyear average. From 1960 to 2021, the average inflation rate was 3.8 percent per year.
“The monthly and annual rates of increase in the Consumer Price Index both came in lower than expected [and] the lowest since January. But if this constitutes improvement, we’ve set a very low bar,” tweeted Greg McBride, a senior vice president and the chief analyst at Bankrate, a consumer financial services company based in New York City.
On a monthly basis, the CPI rose 0.4 percent in October, seasonally adjusted, the same increase as in September. Excluding the volatile food and energy sectors, the “core” CPI rose 0.3 percent in October, compared with a 0.6 percent increase in September.
Year over year, the core CPI rose 6.3 percent from October 2021 to October 2022, down from the 6.6-percent annual increase through September. The slower pace of inflation “points to some easing in the cost of living pressures that hit the poor particularly hard,” tweeted Mohamed A. El-Erian, chief economic adviser at Allianz, an international financial services provider.
Inflation-Adjusted Earnings
Above-average inflation means the buying power of workers’ take-home pay has been shrinking. Real (inflation-adjusted) average hourly earnings fell 2.8 percent, seasonally adjusted, from October 2021 to October 2022, the BLS separately reported.
The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.7-percent decrease in real average weekly earnings over this 12-month period.
Related SHRM Articles:
2023 Social Security Wage Cap Jumps to $160,200 for Payroll Taxes, SHRM Online, October 2022
Keeping Pay Structures Current in a Volatile Market, SHRM Online, October 2022
Wage Growth at Small Businesses Stays Strong, SHRM Online, September 2022
US Employers Boost Pay Budgets Despite Recession Concerns, SHRM Online, August 2022
Related SHRM Resources:
Salary Increase Projections 2023 (and 2022), SHRM Express Request
[Need real-time, HR-reported compensation reports? Check out the SHRM Compensation Data Center]