1:56 p.m. ET, June 7, 2024
All eyes now turn to next week’s CPI inflation report
A worker plasters a ceiling of a new housing complex on Feb. 22, 2024, in the southwest Portland, Oregon.
Jenny Kane/AP
Stronger-than-expected wage gains for the month pushed up average hourly earnings to 4.1% over the past year, reversing a monthslong trend of cooling.
âThe Fed doesnât directly target wages; but where the wages picked up are in the [service sector] areas where weâve seen the most inflation,â Diane Swonk, chief economist with KPMG, told CNN.
Thatâs in the service sector, everything from personal care services, cleaning and home maintenance, and vehicle maintenance, she said.
âAnd that is something that is hard for the Fed, because in order for some of the increases weâre seeing in the service sector, we need to see offset in goods prices in order to bring inflation down,â she said. âBut you need a lot of that consistently to deal with stickier inflation that weâre seeing in the service sector; and, unfortunately, wages matter more in particular areas where inflation has gotten stickiest.â
Coming out on Wednesday, the same day the Fed is set to announce its latest monetary policy decision, early economists’ projections are for consumer prices to have slowed on a monthly basis and for a key underlying inflation gauge to moderate as well.