Back
~
3
min read
· Posted on
February 21, 2024

Facepalm: We already knew inflation was climbing, but now we know real wages ain't keeping up

Not only has inflation gone up, but now we know 'real wages' went down.

What's the key learning?

  • Figures from New Zealand show that their inflation reached a 32-year high while in the US, prices are up 9.1% this June.
  • Along with the rising inflation, real wages went down.
  • Real wages refers to how much you make after you take inflation into account.

👉 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.

What's the key learning?

💡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.

Ready to win at money?

Sign up for Flux and join 100,000 members of the Flux family

A button to App StoreGoogle Play store button
Excellent  4.9 out of 5
Star rating
No items found.