NYT Editorial: Wages Lag Inflation, Again

The Labor Department's recent inflation report was good news if you don't eat, drive, or belong to the 80 percent of the work force whose pay has failed to keep up with price increases over the past year.

In April, consumer prices rose 0.5 percent over all, driven mainly by increases in food and oil. But "core" prices - everything except food and oil - didn't budge. Since a low and stable core rate signals economic growth without overheating, April's number was widely taken to mean the Federal Reserve would continue to raise interest rates gradually. Predictably, stock and bond markets rallied.

Families, on the other hand, have little reason to cheer. The core rate is meaningful for financial markets, but real people buy food and gas. Moreover, the smaller a paycheck is, the bigger the percentage of pay that is consumed by essentials. Poor families, for instance, spend at least four times as much of their pay on energy as rich families do.