Inflation has once again overtaken wage growth in the United States, eroding Americans' purchasing power. Consumer prices rose 3.4% in August from a year earlier, while average hourly earnings increased just 3.1% over the same period, according to separate reports released Friday by the U.S. Bureau of Labor Statistics. Real average hourly earnings, adjusted for inflation, fell 0.1% from July and were down 0.3% from a year earlier in August. Heather Long, chief economist at Navy Federal Credit Union, told CNBC that April marked a clear turning point after a lengthy stretch in which wage growth had generally exceeded inflation, and that energy costs, including a 3.9% rise in gasoline prices in August alone, are a major source of pressure. Long said it is difficult to see inflation falling substantially while geopolitical pressures continue, and that the best-case outcome could be for wage growth and inflation to converge again around the beginning of 2027.
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