Despite higher wages, inflation gave the average worker a 2.4% pay cut last year

cnbc.com:

Inflation is taking a big bite out of workers' paychecks, eroding many of the raises businesses have offered to attract and keep employees in a hot job market.

But strong wage growth in certain sectors, such as hotels and restaurants, has eclipsed those consumer price leaps — at least for now.

The biggest raises have come in some of the country's lowest-paying jobs, helping insulate cash-strapped households from rising prices for staples like food.

More from Personal Finance:Rising inflation may affect your 2021 tax billTax filers should expect delaysBank of America is cutting overdraft fees

The Consumer Price Index, a key inflation measure, jumped 7% in December from a year ago, the fastest rate since June 1982, the U.S. Department of Labor said Wednesday.

The index accounts for costs across many goods and services, from alcohol to fruit, airfare, firewood, hospital services and musical instruments. On average, a consumer who paid $100 a year ago would pay $107 today.

Average pay also jumped significantly in 2021 — to more than $31 an hour, a 4.7% annual increase, the Labor Department reported Friday.

Despite that pay bump, higher consumer prices ate into household budgets. In effect, the average worker got a 2.4% pay cut last year, according to seasonally adjusted data published by the Labor Department.

«In what was the best year for wage growth that we have seen in many, many years, it still comes up as a loss for many households,» said Greg McBride, chief financial analyst for Bankrate. «Their expenses increased even faster and chewed up all of the benefit of whatever pay raise they had seen.»

So-called real earnings (wages minus inflation) fluctuate widely from household to household. The experience will differ