Inflation surged in June and workers’ average wages accelerated in the spring — signs that Americans won’t likely feel any relief from rising prices anytime soon.
On a month-to-month basis, too, prices surged 1% in June, the biggest such rise since 2005. Even excluding the volatile food and energy categories, prices climbed 0.6% from May to June.
Friday’s figures underscored the persistence of the inflation that is eroding Americans’ purchasing power, dimming their confidence in the economy and threatening Democrats in Congress in the run-up to the November midterm elections. But more persistent drivers of inflation show little, if any, evidence of slowing. The wage data released Friday — a measure known as the employment cost index — indicated that paychecks were still growing at a robust pace. That’s good for workers, but it could raise concerns at the Fed about its effect on prices. Chair Jerome Powell specifically cited this measure during a news conference Wednesday as a source of concern for the the central bank’s policymakers.
Rising consumer demand for services, such as airline tickets, hotel rooms and restaurant meals, is still helping fuel inflation. Many retail and consumer goods chains, though, say inflation is squeezing shoppers and limiting how far their money goes — a sign that consumer spending could further weaken.
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