US Consumer Price Increases Are Eating Away Worker Wage Gain

U.S. Consumer Price Increases Are Eating Away Worker Wage Gains

LINK: https://www.wsj.com/articles/u-s-consumer-prices-increase-at-fastest-annual-rate-since-2012-1531398709?mod=hp_lead_pos6

Consumer prices and wages have both been rising, contributing to an increase in inflation. The consumer price index\'s growth has been the highest since 2012. Inflation has been offsetting wage increases, so workers have no real wage increase and, in some cases, have a net decrease. The economy is booming, but this means the average worker is not benefitting from it. Companies are benefitting greatly because they are underpaying wages compared to current consumer prices, improving their profit margin. Additionally, interest rates are also rising this year. With many signs of a strong economy, the impact of impending trade deals remains to be seen. Prices could rise even higher, further outgrowing wage increases and forcing employees to demand higher wages.

QUESTIONS:  
  

How much of an impact do you foresee politics having on inflation, interest rates, and wages over the next 3-5 years? How will personal finance be impacted during that time?

If you were the finance manager of a business that buys goods for resale, describe how these trends affect your bottom line and the decisions you would make because of rising inflation.

Solution

politics according to me always plays a vital part in the economy but its far more tricky then you think right now as per the scenario what i feel that, the interest rates will rise and the consumer prices and wages might be the key for the elections, because no matter what they do and why they are, they always have a key point in their safe box to open for the next election, so I think that after some time, like 2-3 years the wages will grow more as compare to consumer prices and they will get benefited but only when they needed to be benefited for the benefit of the political parties.

In this scenario obviously, personal finance has its own role to play in this game this can be reason among many to raise the wages more than the prices because they need money to flow but if people won\'t have that, it won\'t going to flow.

As a finance manager this is a good time to make money and I will, as finance personal for us its all about money so I will make money and give that money to my firm as much as possible, I feel first, as the people are not aware that the prices and wages comparison and if they are it won\'t affect them because its starting and people usually don\'t care about things in starting, but after some time this will affect them and then would be the time when prices need to bring down.

hope I helped you in solving your problem if in case you have any other query in the future feel free to ask us.