Not only has inflation gone up, but now we know 'real wages' went down.
👉 Background: So, if 'pandemic' and 'unprecedented' were the words of 2020 and 2021, clearly the hot word this year is 'inflation'. New figures released from New Zealand show that their inflation accelerated from 6.9% to 7.3%. That's a 32-year high.
👉 What happened: Things ain’t so great in the US either, where prices are up 9.1% this June compared to the same time last year. That’s also worse than expected, and the worst since 1981… when Bette Davis Eyes was the #1 hit.
👉 What else: That's not even the worst of it. Not only did we see inflation go up, but ‘real wages’ went down.
💡Real wages refers to how much you make after you take inflation into account. Think about it: If you keep making the same dollar amount but everything from bread to Netflix gets more expensive, your purchasing power actually decreases.
💡That’s what’s happening in a lot of places right now. When you adjust for inflation, incomes were down 1% in the US over June. And real average hourly earnings were down 3.6% compared to last June.
💡So it will be interesting to see what more the reserve banks in both NZ and the US do to curb the issue.
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