Americans are losing purchasing power / Inflation is rising faster than wages

Americans are once again facing a decline in purchasing power after August inflation exceeded the pace of wage growth. Consumer prices rose by 3.4% compared with the same month in 2025, while average hourly earnings increased by 3.1%, according to CNBC.

Real hourly earnings, adjusted for inflation, fell by 0.1% compared with July and by 0.3% compared with August 2025. Economist Heather Long warns that the incomes of a significant portion of the population are no longer keeping pace with rising prices.

This development reverses the trend recorded from May 2023 through the spring of this year, when wages were generally rising faster than prices. The pressure intensified starting in April, amid rising energy costs and supply disruptions associated with conflicts in Iran and Ukraine.

Gasoline prices rose by 3.9% in August and contributed to more than a third of the increase in inflation. Diesel reached six dollars per gallon. In this context, households, including those with higher incomes, are increasingly turning to discount stores and chains such as Costco and Aldi.

Signs of stabilization between wages and inflation may not appear until early 2027.