After years of stagnation following the Great Recession, American wages are finally on the upswing.
Wages in October grew 2.4 percent over the previous year, the fastest pace since 2009. That growth, along with a strong dollar and the election of Donald Trump, has many economists expecting inflation to start moving higher next year.
Inflation is expected to average 1.5 percent this year, and economists are predicting an inflation rate of just over 2 percent in 2017. While low when compared to historical averages, it would still be an increase. And an increase in inflation, or just the expectation of it, could prompt the Federal Reserve to resume its interest rate hikes.
Prices could go up even faster if Trump makes good on some of his campaign promises, such as deporting illegal immigrants, who make up a disproportionate share of low-wage workers, and imposing tariffs on imports from Mexico and China. Depending on how much of his agenda he’s able to enact, inflation could be 2.6 to 3.6 percent next year, and up to 5 percent in 2018, according to an analysis by Moody’s Analytics.
Trump aside, the prices on some items are going up already, and some of them are rising far faster than the 2 percent inflation rate. Things getting more expensive include housing, higher education and prescription drugs. Click here to see 15 items that will cost you more next year.