?Inflation has eased again from its scorching hot pace, now sliding to a 4 percent annual rate, although many employees are still feeling its persistent effects, according to new figures out today.
The Consumer Price Index (CPI) for all items rose 4 percent for the 12 months ending in May, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported June 13. That’s well below the 4.9 percent year-over-year notch it reached in April and a significant improvement from when it peaked last summer at 9.1 percent.
On a monthly basis, the CPI rose 0.1 percent in May, seasonally adjusted, after increasing 0.4 percent in April.
It’s the latest month of slowed inflation, although core inflation is still running hot. Core inflation, excluding food and energy, rose 0.4 percent in May, as it did in April and March.
The index for shelter was the largest contributor to the monthly all items increase, followed by an increase in the index for used cars and trucks, the BLS reported. The food index increased 0.2 percent in May after remaining unchanged the previous two months. The index for food at home rose 0.1 percent over the month, while the index for food away from home increased 0.5 percent. The energy index, though, declined 3.6 percent in May as the major energy component indexes fell.
Despite the slowing, it remains to be seen how fast the inflation deceleration will affect employees. Its persistent high rate over the past two years has beset workers as they forked over higher prices for food, shelter, gas and other expenses. It’s also impacted their retirement and emergency savings strategies. Although wages have increased in response, salaries have largely trailed inflation.
Real average hourly earnings increased 0.2 percent, seasonally adjusted, from May 2022 to May 2023, the BLS reported separately today. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 0.7 percent decrease in real average weekly earnings over this period.
Inflation’s slowdown is positive news for many, although employees—among all earners—are still feeling the effects.
Several recent studies indicate that not only is financial stress on the rise among all workers, but high-income employees are feeling less confident about their financial situations than they were a year ago, when inflation hit a four-decade high.
Households earning more than $100,000 per year saw the biggest drop in financial well-being compared with a year ago, according to a poll by Morning Consult released last month. While scores dropped from 2022 to 2023 among all U.S. adults polled, the scores among those making six figures dropped 2.45 percentage points to 57.07 from 59.52 a year earlier. Comparatively, year-over-year financial well-being scores for those making between $50,000 and $99,000 dipped 0.59 points, from 51.90 in 2022 to 51.31 in 2023, while scores for those making under $50,000 dropped 0.86 points, from 46.24 in 2022 to 45.38 in 2023.
“Every employee’s dollar does not go as far today,” Charles Lattimer, chief health and wellness officer at FinFit, a Virginia Beach, Va.-based financial wellness firm, recently told SHRM Online. “Financial instability and stress is ubiquitous across demographics.”
