Inflation picked up again in December, according to the latest government figures out today, signifying that the fight to rein in high cost-of-living is not over.
The yearly rate of inflation rose to 3.4 percent before seasonal adjustment in December, according to the Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics (BLS), up from the 3.1 percent unadjusted rate reported in November.
On a monthly basis, the CPI rose 0.3 percent in December, seasonally adjusted, after rising 0.1 percent in November.
Core inflation—which accounts for all items minus food and energy—rose 3.9 percent over the last 12 months, after rising 4 percent over the 12 months ending in November.
The month’s inflation increase is higher than analysts predicted, however inflation has largely trended in the right direction in the past year. Inflation has drastically slowed since it hit a peak of 9.1 percent last summer.
However the effects of persistent high costs of living have been continually weighing on workers. As a result of high inflation and economic uncertainty, employee financial wellness hit an all-time low last year, according to a recent Bank of America report. Credit card debt has also hit a new record high, and a recent LendingTree report found that more than 6 in 10 workers (62 percent) say they are living paycheck to paycheck—a statistic virtually unchanged from a year ago.
Real average hourly earnings increased 0.8 percent, seasonally adjusted, from December 2022 to December 2023, the BLS reported separately today. The change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period.
Ruth Thomas, pay equity strategist at Payscale, recently told SHRM Online that she expects pay increases will meet or exceed inflation in 2024 for the first time in years. However, she said, real wages will continue to lag.
“Workers still feel the burden of higher prices, contributing to tensions on growing wealth inequality and potential unrest,” Thomas said. “Employers should ensure pay increases remain strong and consider salary adjustments to keep up with market changes to avoid turnover from employees seeking better pay.”