Inflation Continues Stubborn Streak, Putting Pressure on Employees

Inflation is proving to be stubborn, with new data finding that annual inflation rose again during the last month of 2024.

The Consumer Price Index (CPI) for all items rose 2.9% for the 12 months ending in December, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported Jan. 15. That’s up from the 2.7% year-over-year increase notched in November, the 2.6% rise in October and the 2.4% increase in September—marking the fourth consecutive month of a year-over-year increase.

On a monthly basis, the CPI increased 0.4%, after rising 0.3% last month.

Core CPI accelerated 0.2% for the month—after increasing 0.3% in each of the previous four months—and 3.2% annually. The annual rate is down a notch from the month prior.

The index for energy rose 2.6% in December, accounting for more than 40% of the monthly all items increase, the BLS reported. The gasoline index increased 4.4% over the month, and the index for food increased as well, rising 0.3% both for food at home and food away from home.

Justin Ladner, senior labor economist at SHRM, said the rise is in part due to gas, food, and vehicle prices trending upward in recent months. The single biggest driver of stubborn inflation, though, is shelter costs, he said, which have continued to grow at a rate that remains high relative to what has been typical in recent decades.

“Because shelter receives such a significant weight in the overall CPI calculation, persistently high inflation in shelter costs tends to prop-up overall inflation,” he said.

The last CPI of the year comes amid SHRM data finding that inflation, although down from the inflation surge in 2021-2022, still has an outsized effect on workers.

Forty-three percent of U.S. workers reported that inflation had an extreme or significant impact on their personal financial situation, according to a SHRM pulse survey of 1,071 U.S.-based workers who were polled from Dec. 16-19. Of those U.S. workers, 18% said the impact was extreme, while 25% said it was significant. Only 5% of U.S. workers reported that inflation had no impact on their personal financial situation.

But many HR leaders aren’t sure they are addressing these concerns enough: While 42% of HR professionals agreed that their organization had successfully addressed employee concerns about the impact of inflation on the value of their compensation, 39% of HR professionals disagreed that their organization had successfully addressed their employees’ concerns.

SHRM data found that 36% of U.S. workers indicated that they were confident their employer would offer fair cost-of-living adjustments in 2025. Of those U.S. workers, only 10% were “very confident.” By contrast, 34% indicated that they were not confident they would be offered fair cost-of-living adjustments in 2025.

Despite employee financial anxiety and an increase in year-over-year inflation, Ladner said it’s important to note that “none of these developments indicate that a new spike in inflation akin to the 2021-2022 period is on the horizon.”

Rather, he said, “the data simply suggest that the downward trajectory in inflation achieved in recent years has stalled.”

Real Earnings

Real average hourly earnings for all employees decreased 0.2% from November to December, seasonally adjusted, the BLS reported separately Wednesday. That result stems from an increase of 0.3% in average hourly earnings combined with a rise of 0.4% in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.1% over the month due to the change in real average hourly earnings combined with no change in the average workweek. 

Real average hourly earnings increased 1%, seasonally adjusted, from December 2023 to December 2024, the BLS reported. The change in real average hourly earnings combined with a 0.3% decrease in the average workweek resulted in a 0.7% increase in real average weekly earnings over this period.