You don’t have to be an economist to know that wages haven’t changed much over the past decade. Most Americans only need to look at their paycheck for proof.
That stagnation, combined with a strong dollar and low oil prices, has helped keep a cap on the prices that we pay for goods and keep inflation at historically low rates for the past few years.
Economists expect price increases to remain muted going into 2016, with forecasters predicting an inflation rate of just over 2 percent next year. While low by historic averages, that would still represent an increase from current levels, though core inflation has reached 2 percent for the 12 months through November.
Any inflation takes its biggest toll on the workers who make the least money, since they’ll have to shell out a larger portion of their paycheck to cover the items they’re already purchasing. Making it even more difficult: The country’s lowest-income workers have seen the smallest relative wage growth.
U.S. GDP is expected to expand 2.6 percent next year, according to the World Bank, after growth of about 2.7 percent this year. That growth is partly due to rising prices in some of the biggest-ticket consumer categories, despite overall low inflation.