Living Costs Rising Fast, and Wages Are Trailing (Michael M. Grynbaum)

The cost of living, led by the soaring cost of gasoline and food, is rising at the fastest rate since the recession of the early 1990s, the government said on Thursday, handing a de facto pay cut to the American worker.

The report, from the Labor Department, offered quantitative proof of what Americans have been feeling for months: almost everything costs more, even as they have less money to pay for it.

{xtypo_quote_right} “Any way you slice it, incomes aren’t keeping up with the inflation rate,” said Michael T. Darda, chief economist at the trading and research firm MKM Partners. {/xtypo_quote_right} 

Prices of a wide range of common products in the Consumer Price Index were 5.6 percent higher last month than they were in July 2007, the sharpest annual increase since January 1991.

Much of the increase has been driven by the immense run-up in gasoline prices. But food, beverage and transportation costs are also significantly higher than they were a year ago.

The higher prices have made many workers’ wages effectively worth less.

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