Did you get a raise in the last 2 years? It is likely that all of this will now be completely eaten away by inflation.

If you got a raise in the last two years, almost all of those gains have now been eaten away by inflation.

That is, if you’re the average earner, given the latest statistics released this week showing that prices have been rising faster than expected.

This is further proof that affordability problems in the American economy are not going away. This also means that the average hourly wage, which had increased after Donald Trump came to power in January 2025, has now returned to its starting level, when inflation is taken into account.

The average hourly wage was $35.84 in January 2025, according to federal statistics, or $37.79 in today’s dollars, adjusted for inflation. The average hourly wage last month was $37.81 – virtually unchanged over the past 20 months.

The Consumer Price Index inflation report released Wednesday by the Bureau of Labor Statistics came in hotter than expected, with prices up 3.7% year-over-year in September. Economists had expected an increase of 3.6%, well above the 3.4% in August.

“We view the September CPI report as further evidence that the United States faces a persistent inflation problem,” BNP Paribas economists said in a note to clients.

This problem means high prices – including gasoline which rose 9.1% in September from the previous month – are eating up any pay raises you might get at work.

Heather Long, chief economist at Navy Federal Credit Union, pointed out that consumer price growth since 2025 has eroded almost all wage increases, citing the impact of the war in Iran, which began in late February, on Americans’ pocketbooks.

“This is a very different situation than during President Trump’s first term, when wages rose more than 15 percent, well above about 8 percent inflation,” Long said. “This helps explain the frustration many households currently feel with the economy.”

Rising prices add to the general sense of economic malaise. The University of Michigan’s consumer confidence index fell to 46.3 in October, from 71.7 in January 2025.

Joanne Hsu, director of the survey, said rising gas prices caused by the Middle East conflict had added to persistent pressures on the cost of living in recent years.

Higher prices and inflation outpacing wage growth can be especially difficult for Americans who are on a tight budget or living paycheck to paycheck. “When you look at the majority of the U.S. workforce, middle- and low-income households, the higher costs of things like gasoline and groceries represent a larger share of their income,” said Nicole Bachaud, an economist at ZipRecruiter.

It’s important to note that there are several ways to interpret the wage versus inflation figures – and in some ways, workers actually came out on top.

For example, the average weekly wage has increased more quickly over the past year than the average hourly wage, as the number of hours worked by the typical worker has increased slightly.

The Trump administration, when asked about the comments, highlighted the annual results. “Under President Trump, private sector workers have seen their wages continue to outpace inflation, with average annual incomes increasing by more than $600,” White House spokesman Matthew Middleton said.

Inflation will play a role in the medium term

The midterm elections are just a few weeks away and affordability will likely be a major concern.

A September survey by the Economic Innovation Group and Echelon Insights asked citizens what elected officials’ priorities were for improving the lives of workers. The survey indicates that 45% of American workers want officials to prioritize reducing the cost of basic necessities, and 23% want them to focus on creating more affordable housing.

Navy Federal’s Long said the “modest increase” in food prices is a bright spot in the latest Consumer Price Index report. Home food items, which include groceries, rose at a slower pace than the 2.9% rise recorded in April, with prices rising 1.8% year-on-year in September.

“But it is inevitable that food prices will rise in the coming months as higher diesel and transportation costs are passed on to consumers,” Long said.

There are other worrying signs that inflation could worsen. Thursday’s producer price index report showed final demand prices rose 1.3% in September, the highest since 2022.