The Consumer Price Index (CPI) for all items rose 8.2 percent for the 12 months ending in September, before seasonal adjustment, just a tick under the 8.3-percent increase for the period ending in August but down from the 9.1-percent high notched for the period ending in June. The annual inflation rate remains near a 40-year high, the U.S. Bureau of Labor Statistics (BLS) reported on Oct. 13.
The all items less food and energy index rose 6.6 percent over last 12 months.
On a monthly basis, the CPI rose 0.4 percent in September after rising 0.1 percent in August, on a seasonally adjusted basis.
The increase disappointed those who had expected to see a greater slowdown in consumer inflation as the Federal Reserve hikes interest rates.
The index for all items less food and energy rose 0.6 percent in September, unchanged from the same rise in August, the BLS reported.
Producer prices are a leading indicator for the prices that consumers eventually pay, and on Oct. 12 the BLS released the September Producer Price Index (PPI), showing that wholesale prices rose 0.4 percent in September, seasonally adjusted, after falling 0.2 percent in August.
The PPI was up 8.5 percent in September year over year, suggesting that inflation is likely to remain high.
Resilient inflation means that the Federal Reserve is likely to continue with large interest rates hikes to slow the economy, increasing recession concerns.
“Inflationary momentum has built up in the U.S. economy and will persist near-term, keeping the Fed hiking aggressively,” Bill Adams, chief economist for Comerica Bank, told CNBC.
Tweeted Mohamed A. El-Erian, chief economic adviser at Allianz, “Once again, hotter than expected US inflation numbers for both the core and headline measures… and, therefore, bad news for the Federal Reserve and markets and, more importantly, the economy and especially the most vulnerable segments of society.”
Inflation-Adjusted Earnings
High inflation means the buying power of workers’ take-home pay has been shrinking. Real (inflation-adjusted) average hourly earnings fell 3.0 percent, seasonally adjusted, from September 2021 to September 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 3.8-percent decrease in real average weekly earnings over this period.
According to an economic analysis posted on Oct. 4 by the Federal Reserve Bank of Dallas, the decline in real wages in the U.S. appears to be “the most severe faced by employed workers over the past 25 years.”
Increase in Social Security Wage Cap
Also on Oct. 13, the Social Security Administration announced that starting in January 2023, the maximum earnings subject to the Social Security payroll tax will increase by nearly 9 percent to $160,200—up from the $147,000 maximum for 2022.
Related SHRM Articles:
2023 Wage Cap Jumps to $160,200 for Social Security Payroll Taxes, 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]
