U.S. wages can’t keep up with consumer prices

Marketplace Staff May 13, 2011
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U.S. wages can’t keep up with consumer prices

Marketplace Staff May 13, 2011
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STEVE CHIOTAKIS: The government said today prices at the consumer level continue to rise slightly. But is the four-tenths of a percent increase in the Consumer Price Index enough to make anyone nervous about inflation? Which by the way is at its highest level in two and a half years.

Jill Schlesinger is editor-at-large at CBS/MoneyWatch. And she’s with us live from New York as she is every Friday. Good morning Jill.

JILL SCHLESINGER: Good morning.

CHIOTAKIS: So what do these incremental rises, month after month, tell us about inflation?

SCHLESINGER: Well, we know that prices are up. They’re up 3.2 percent from a year ago. Part of that increase is healthy. The economy is growing again, it’s part of what the Fed wanted to do to kind of get inflation cooking because they were scared of deflation. But as we know, part of that — probably half of it — is because of gas prices.

CHIOTAKIS: And healthy you saw, but what about wages? Are people making more money to match?

SCHLESINGER: Well, I think that’s the painful part of this report. Because while prices are rising, wages aren’t moving that much. In fact that employment report last week told us average hourly earnings were only up 1.9 percent over the last year. So we made 1.9 percent more, but things are up by 3.2 percent. That’s why consumers are hurting.

CHIOTAKIS: Jill Schlesinger from CBS/MoneyWatch. Jill thanks.

SCHLESINGER: Great to be with you.

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