Americans’ inflation-adjusted income fell 0.6% in the 12 months through September, showing that paychecks grew more slowly than the cost of goods and services, according to new data from the Bureau of Labor Statistics.
The decline in real income — a measure of purchasing power after accounting for inflation — followed a smaller 0.3% decrease in June over the previous 12-month period. The figures indicate that nominal pay gains have not fully offset higher household expenses as inflation has picked up.
Prices rose faster than wages
BLS data showed that wages and salaries increased 3.1% during the year ended in September. The Consumer Price Index, which tracks the prices consumers pay for a broad group of goods and services, rose 3.7% over the same period.
| Measure | Change over 12 months through September |
|---|---|
| Wages and salaries | Up 3.1% |
| Consumer Price Index | Up 3.7% |
| Real income | Down 0.6% |
The gap matters because a higher dollar wage does not necessarily translate into greater financial flexibility. When prices rise faster than earnings, the same income covers fewer goods and services. That can affect household budgets for necessities, debt payments, savings and other expenses, although the BLS figures do not show how individual households experienced the change.
Fuel costs add to inflation pressure
Higher fuel prices were cited as one factor behind the recent increase in inflation. Gasoline and diesel costs rose amid concerns about energy shipments through the Strait of Hormuz. The increase in fuel prices can also raise transportation and delivery costs, adding pressure to the prices of other goods.
The latest income figures come after a period in which real income had improved. Inflation-adjusted income fell by as much as 3% annually in 2021 and 2022, when inflation reached two-decade highs. It then rebounded from 2023 through 2025 before declining again in the latest data.
Economic concerns rise ahead of midterms
The purchasing-power figures arrive as inflation remains a central concern for voters. A new Gallup poll identified the economy as voters’ top concern, reaching its highest level since 2010.
The data also come before the Nov. 3 midterm elections, when voters will choose members of Congress. President Donald Trump has continued to focus on wage growth, but the BLS figures show that the recent increase in pay has been outpaced by higher consumer prices.
- Real income declined 0.6% over the 12 months through September.
- Wages and salaries rose 3.1%, below the 3.7% increase in consumer prices.
- Higher fuel costs were among the factors contributing to renewed inflation pressure.
