Inflation climbed above 4% in May for the first time in three years, putting renewed pressure on workers’ budgets and making it harder for many employees to keep up with rising living costs.
The consumer price index (CPI) increased 0.5% on a seasonally adjusted basis in May and rose 4.2% year-over-year, the U.S. Bureau of Labor Statistics (BLS) reported June 10. That’s well above last month’s annual inflation figure of 3.8% and March’s figure of 3.3%.
Significantly, it marks the first time the CPI has passed 4% since May 2023.
Elevated gas prices resulting from the war in Iran continued to fuel much of the rise. The index for energy rose 3.9% in May, after rising 3.8% in April and 10.9% in March. The energy index accounted for more than 60% of the monthly all items increase.
Article: Iran War is Lifting Gas Prices. Should Employers Help?
The index for shelter also increased in May, rising 0.3%, while the food index increased 0.2% over the month, the BLS also reported.
Core inflation, which excludes volatile food and energy prices, rose 2.9% over the year, following a 2.8% increase over the 12 months ending in April.
The sustained impact of tariffs and higher import costs, as well as elevated healthcare costs, are also likely contributing to higher inflation.
The inflation report serves as the latest indicator that high cost of living is a major pain point for workers.
Employee financial confidence has fallen to its lowest level since 2012, according to MetLife, while financial literacy has also fallen to a 10-year low, according to a study by investment giant TIAA and Stanford University’s Global Financial Literacy Excellence Center.
Meanwhile, 68% of employees experienced at least some financial stress in the past year, and 45% say financial concerns increased their mental stress, according to recent data from Prudential Financial.
Adding to financial pressures for employees, real average hourly earnings for all employees decreased 0.1% from April to May, seasonally adjusted, the BLS also reported June 10. This result stems from an increase of 0.3% in average hourly earnings combined with an increase of 0.5% in the CPI.
Amid persistent inflation and rising living costs, employers are placing renewed emphasis on helping employees navigate financial pressures through financial wellness benefits, emergency savings programs, and mental health support.
Article: Employers Lean on Financial Wellness Benefits as Worker Stress Climbs
“It’s especially important in times like today, where inflation and cost-of-living are straining households even more and pushing them into survival mode,” said Jackie Stinnett, vice president of people and great work at O.C. Tanner.
“When employers provide financial wellness benefits, it helps create a sense of security and stability,” Stinnett explained. “If [employees] feel supported in that way, it reduces anxiety and builds a strong relationship of trust with their organization, allowing them to show up fully at work and in their personal lives.”
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