SAN GABRIEL VALLEY — Slowing inflation and rising wages are offering signs of a more stable economic environment after years of sharp price increases. Federal data show inflation remains elevated, but it has fallen substantially from its 2022 peak.
The Consumer Price Index increased 3.4% during the 12 months ending in July, according to the U.S. Bureau of Labor Statistics. Consumer prices increased 0.1% during July alone.
Core inflation, which excludes food and energy, stood at 2.5% year over year.
Those figures remain important for San Gabriel Valley households still adjusting to higher costs for everyday goods and services.
Lower Inflation Does Not Mean Lower Prices
Falling inflation does not mean prices are returning to previous levels. Inflation measures how quickly prices rise, rather than the prices consumers pay.
A product that became significantly more expensive during 2021 and 2022 can remain expensive even as inflation slows. Lower inflation generally means those prices are increasing at a slower pace.
Annual inflation reached 9.1% in June 2022, compared with 3.4% this July.
The Federal Reserve’s longer-term inflation goal is 2%, measured using the Personal Consumption Expenditures price index. That differs from the Consumer Price Index.
Readers can review current inflation figures through the U.S. Bureau of Labor Statistics.
Slowing Inflation And Rising Wages Converge
Wages have continued increasing as inflation has moderated.
Average hourly earnings for private-sector employees reached $37.62 in July, according to BLS. That represented a 3.2% increase from a year earlier.
The figures do not show wages outpacing headline inflation. Consumer prices increased 3.4% during the same 12-month period.
Still, the difference between wage growth and inflation is much narrower than during the inflation surge.
If inflation moderates further while wages continue growing, workers could see greater improvements in purchasing power.
Local Businesses Also Feel Price Pressures
The relationship between wages and prices matters to businesses throughout El Monte, South El Monte, Baldwin Park, Rosemead and Irwindale.
Businesses pay for supplies, wages, insurance, utilities, equipment and transportation. Their customers must make spending decisions based on many of the same pressures.
Rapid inflation can make it harder for businesses to predict costs and set prices. More stable inflation can make budgeting and longer-term planning more predictable.
The Federal Reserve considers stable prices important because they allow households and businesses to make better-informed decisions about spending, borrowing and investment. More information about its 2% longer-term inflation objective is available from the Federal Reserve.
For San Gabriel Valley households, slowing inflation and rising wages do not erase the cumulative price increases of recent years. Groceries, housing and other expenses can still strain family budgets.
The latest figures instead show that the pace of change is becoming more moderate.
Whether that improvement continues will depend on inflation, employment and wage trends during the coming months. A sustained period of slower price increases and continued income growth could give local households and businesses greater stability when making financial decisions.
