Consumer prices rose 8.6% in May. Wage growth in Illinois has not kept pace, leaving the average worker over $2,200 worse off.
New inflation data released on June 10 by the Bureau of Labor Statistics projects that average prices rose 8.6% from May 2021 to May 2022. After a slight dip in April, the new data suggests that the inflation has now returned to the high levels seen in March 2022.
Illinois is already feeling the pain of the highest inflation rates in 40 years. While the average private sector worker in Illinois has seen their compensation increase by more than $3,408 in the past 12 months, prices have risen much faster. To keep up with inflation, the average Illinois worker would have needed a $5,635 pay raise.
Thanks to inflation, the $3,408 pay rise for Illinoisans was actually the equivalent of a $2,228 pay cut, as wage increases did not keep up with the cost of living.
When you add up all the price increases due to inflation, Illinoisans are paying $4,386 more for the same goods and services this year than they did last year.
On an annual basis, the average worker in Illinois will pay $1,122 more for gas this year, $910 more for housing, $504 more for groceries and $280 more for utilities . By the time you add up all the different ways inflation is cutting you, the total cost comes to over $4,386.
In many cases, there is little Illinois can do to avoid the inflation tax. Gasoline has increased by 49% over the past year; Grocery bills increase by 12% on average; energy services are up 16%. Workers cannot simply stop their daily commute, buy less food for their families, or stop heating and cooling their homes.
Much of this spending is necessary. So high inflation means Illinoisans are gritting their teeth and paying higher bills. This leads to reductions in other recreation and leisure activities and reduced savings, which ultimately reduce the quality of life for Illinois today and in the future.
With many economists predicting a prolonged period of high inflation, the Federal Reserve will likely have an incentive to continue raising interest rates. For Illinoisans, this presents an unpleasant trade-off: continued high inflation or rising unemployment due to rising interest rates.
Neither scenario will be friendly; however, they seem inevitable as record spending and widespread federal stimulus, coupled with supply chain disruptions and pent-up demand from COVID-19, have created our current inflationary environment.
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