Price Hikes Undercut Wage Gains; Energy Costs Led 0.6% Rise in CPI, but Many Experts Call Spike Temporary
With high energy costs the main culprit, consumer price inflation, at least temporarily, is eating up the lion's share of the average American's annual increase in wages.</br></br>The consumer price index rose 0.6 percent last month and 3.7 percent over the past 12 months, the fastest rate of increase since 1991, the Labor Department reported yesterday.</br></br>Over the same period, average hourly wages for production and non- supervisory workers increased 3.6 percent, according to earlier department reports. Those figures include overtime pay but not bonuses or fringe benefits.</br></br>Most analysts think this situation will be short-lived, because many energy prices appear close to a peak, the food and beverage prices rose only 0.1 percent last month, and the rest of the consumer price index--the "core," which excludes both food and energy prices-- rose 0.2 percent for the third month in row. Since June 1999 the core CPI is up 2.4 percent, but it rose at a slower 2 percent rate in the past three months, the department said.</br></br>On the energy front, there already has been some relief. In recent weeks, Saudi Arabia has proposed increasing production by 500,000 barrels daily but so far has not gotten agreement from other members of the Organization of Petroleum Exporting Countries to do so.