If your raise was below 7.1% last year, it probably doesn’t count. With the Consumer Price Index (CPI) rising by this percentage year-over-year last November, you could be earning less even if you got a salary bump. CPIs calculate monthly price changes paid by consumers on day-to-day goods and services.
The Bureau of Labor Statistics (BLS) represents CPIs as weighted price averages for a particular basket of consumer items. Besides measuring inflation and purchasing power, CPIs index rents, interests, social security benefits, and pensions. Some governments even use them to calibrate monetary policy.
Affected Sectors
Whether you’re shopping online, buying groceries at the local store, or filling up at the gas pump, your money isn’t going as far as it used to. However, some Americans are feeling the pinch more than others. Taking the case of 2022, supply chain setbacks and component scarcity led to soaring prices, severely affecting durable goods enterprises. This was also the case for commodity businesses.
The COVID-19 recession is partly to blame for the supply chain issues that hampered manufacturing, storage, and shipping. Another factor was the Russia-Ukraine war that increased food and gas prices by disrupting supply. Surprisingly, leisure and hospitality staff outpaced inflation with their 2021 and 2022 earnings. COVID-19 might have stalled hotel and bar operations, but the industry bounced back with mass hiring as Americans’ spending increased.
Inflation Might Cool Down, but It’ll Take Time to Recover
According to a past Bankrate survey, most workers with increased incomes couldn’t adjust their expenses to the biting inflation. That’s despite experiencing one of the strongest real wage growth in years. Some workers got a raise, others transitioned to better-paying jobs, while others received both.
However, things are starting to look up if the November CPI report is anything to go by. Prices rose 7.1% yearly in November, decreasing from October’s 7.7%. Stubborn sectors like apparel, energy, and used cars are also recording lower prices.
That notwithstanding, it’s too early to celebrate. It’ll take time before the market adjusts to the Russia-Ukraine war and COVID-19 aftermath. The good news is employees have an upper hand thanks to the ongoing labor shortage. Despite the recent tech layoffs, employers are still desperate for talent because of early retirement and restrictive immigration laws.
Remedy Attempts
When COVID-19 struck, the federal government allocated billions of dollars to cushion Americans from the economic decline. But although the Rescue Plan and stimulus relief dried up, Colorado, Pennsylvania, California, South Carolina, Idaho, and New Jersey still have funds to distribute.
Remember, every state has different requirements. For instance, Pennsylvania only offers rebates to widows and widowers aged 50 and above and residents aged 65 and above. Disabled people aged 18 and above are also eligible provided they meet specific income thresholds. On the other hand, California payments depend on income, household size, and tax return status.
Another relief measure is the Inflation Reduction Act which offers free vaccines for certain conditions, lower insulin costs, and subsidies on health insurance. You also get credit for electric vehicles and home energy upgrades. Note that you must meet certain conditions to qualify for these benefits.
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