US Inflation Ticks Higher, but Wages Lag - Not Good for the US Consumer - FX Leaders News

US Inflation Ticks Higher, but Wages Lag – Not Good for the US Consumer

Posted Wednesday, March 15, 2017 by
Skerdian Meta • 1 min read

The monthly US inflation report was mainly positive, with the main CPI (consumer price index) number slightly beating expectations.

Core retail sales also beat expectations by 0.1%, but the best of the retail sales report came from last month´s numbers. Core retail sales jumped a staggering 0.8% last month, but now they were revised higher to 1.2%.

Anyway, the wages (average weekly earnings) are obviously moving higher in the US, but so is inflation. Last time, the annualized number for wages was 2.8%, which is pretty good, but inflation is running at a higher speed.

Down we go again

The chart above shows the wages stripped off the inflation. As you can see, the real wages have been in positive territory since 2012, but last month they declined by 0.5%, which means that prices have gone up faster than wages.

That´s not really good news for the FED, because the US consumer is the base where they´re building this rate hike fortress and if the real wages decline, then the consumer won´t be that confident. Well, the odds for today is that we´ll see the second interest rate hike in three months. Do those guys know something we don’t? 

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About the author

Skerdian Meta is our Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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