American workers’ inflation-adjusted hourly pay shrank 0.3% in the 12 months through August, according to the Bureau of Labor Statistics. Prices rose faster than paychecks. The next reading comes Wednesday, when September inflation data is due.
What the Federal Data Show
The Bureau of Labor Statistics released the August consumer price index on Sept. 11. Prices for all items rose 0.4% from July after seasonal adjustment and 3.4% from a year earlier. Without food and energy, prices rose 0.3% on the month and 2.4% on the year.
The same morning, the bureau published its real earnings summary. Real average hourly earnings for all employees fell 0.1% from July and 0.3% from August 2025. For production and nonsupervisory workers, real hourly earnings fell 0.1% over the year.
Weekly pay held up better. Real average weekly earnings for all employees rose 0.3% over 12 months. Hourly pay down and weekly pay up means hours worked rose over the year. Each hour bought less, and workers made up some of the difference by working more of them.
What the September Jobs Report Added
The bureau’s September employment report, published Oct. 2, showed employers added 29,000 jobs. The bureau said payrolls and the jobless rate both “changed little in September.” The average monthly gain over the prior 12 months was 45,000. The unemployment rate was 4.2%, with 7.1 million people out of work, and the rate has stayed between 4.1% and 4.3% since March.
Revisions made the picture weaker. The bureau lowered July payrolls to a loss of 10,000 jobs. It cut August to a gain of 133,000. Average hourly earnings for private employees rose 5 cents in September to $37.81, a 0.1% monthly gain. Over 12 months, wages increased 3.0%. For production and nonsupervisory employees, hourly earnings rose 7 cents to $32.60. The average private workweek was 34.4 hours, unchanged from August.
Health care added 17,000 jobs, slower than its 33,000 monthly average over the prior year. Hospitals added 12,000 and ambulatory care 13,000, as nursing and residential care facilities lost 9,000. Construction added 11,000 jobs and manufacturing 9,000. Financial activities lost 7,000.
The Arithmetic Behind the Gap
The bureau does not publish a September real-earnings figure until the CPI comes out, so the comparison below mixes months. It uses September’s 3.0% wage growth and August’s 3.4% inflation rate, and it is this article’s own arithmetic, not a BLS calculation.
A 3.0% gain that ended at $37.81 an hour implies a September 2025 average of about $36.71. If wages had kept pace with 3.4% inflation, the average would have reached about $37.96. The shortfall is roughly 15 cents an hour. Across the 34.4-hour average workweek, that is about $5 a week, or around $270 over a year. At $37.81 an hour, the average private worker’s weekly pay works out to about $1,300.
The shortfall would shrink or grow with Wednesday’s number. The bureau has scheduled the September CPI release for Oct. 14 at 8:30 a.m. Eastern. A reading below 3.0% would put wages back ahead of prices on a 12-month basis. A reading above 3.4% would widen the gap.
Where Grocery Prices Sit
The August CPI shows food prices rising more slowly than the overall index. Food rose 2.7% over 12 months. Food at home, the grocery-store category, rose 2.2% and was flat from July. Food away from home rose 3.4%. Shelter rose 3.0% over the year, and medical care rose 1.6%. The bureau reported that energy prices were up 16.3% over the year, the largest increase among the major categories.
The U.S. Department of Agriculture’s Economic Research Service updated its food price outlook on Sept. 25, after the August CPI. It forecasts grocery prices up 2.4% for 2026 and restaurant prices up 3.5%. The forecast range for grocery prices runs from 1.8% to 3.0%.
Individual items diverge widely. The service forecasts beef and veal up 9.4% this year, sugar and sweets up 6.6% and fresh vegetables up 5.7%. It forecasts eggs down 29.4%, and farm-level egg prices down 79.2%. Dairy is forecast at 0.1%.
The service’s farm-level forecasts show where some of those retail moves start. It expects farmlevel cattle prices up 7.1% this year and wholesale beef up 8.5%, which sits close to the 9.4% retail forecast for beef and veal. Farm-level wheat is forecast up 18.3% and farm-level vegetables up 16.0%. Farm-level milk is forecast down 9.4% and farm-level fruit down 4.1%.
Grocery shoppers see only part of such swings, because retail prices also include processing, transport and store costs. The service also published 2027 forecasts, and they carry wide margins. It puts 2027 grocery price growth at 1.8%, within an 80% interval of negative 5.0% to 9.2%.
What Households Can Check
The August numbers explain why a 3.0% raise felt thin to many households this year. Workers can compare their own raise with the 12-month change in the CPI, which the bureau publishes each month on its CPI page. The bureau’s real-earnings table adjusts for prices on a national basis and does not reflect any one family’s spending mix. A household that buys more beef than eggs will see a different bill from the national average.
The August report also showed rent and owners’ equivalent rent each rising 0.2% on the month, a slower pace than the 0.3% for shelter as a whole. The September report will show whether that held. The bureau’s August release put the all-items index at 334.980, and Wednesday’s figure will show how far that level has moved.
