SAEDNEWS: U.S. inflation eased slightly in July, but prices continued to rise faster than wages, weakening Americans’ purchasing power amid economic pressure linked to the war with Iran.
According to SaedNews: While American consumers continue to face higher prices amid the war with Iran, the latest government figures showed some signs that inflationary pressure may be easing.
Even so, prices are still increasing faster than wages, reducing the purchasing power of U.S. households. Wages have trailed inflation since April, which some analysts say has added to pressure on family budgets following the price surge associated with the war with Iran.
The loss of purchasing power among workers also helps explain widespread dissatisfaction with inflation, despite the rate remaining well below its peak during the COVID-19 pandemic.
The issue is gaining greater political significance as the November midterm elections approach. A Washington Post-Ipsos poll found that a majority of registered voters consider the economy and high prices among the 3 most important issues influencing their decisions in congressional elections.
Harry Holzer, a Georgetown University public policy professor and former chief economist at the U.S. Department of Labor, said people dislike inflation and become even more dissatisfied when rising prices erode their wage increases.
Federal data showed that prices in July were 3.4 percent higher than a year earlier, slightly below June’s 3.5 percent rate. Monthly inflation rose 0.1 percent in July.
Meanwhile, the July employment report showed annual wage growth slowing to 3.2 percent, its lowest level in several years. Wage growth therefore remains below inflation.
That gap means workers’ real wages are declining and could constrain household spending, making the issue an important economic and political concern in the United States ahead of the midterm elections.
