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A woman pumps gas in Montreal, on March 4.Graham Hughes/The Canadian Press

Another month, another spike in the cost of everything.

In February, consumer price gains in the U.S. hit a new 40-year high, with annual inflation reaching 7.9 per cent, figures released Thursday by the Bureau of Labor Statistics show. And that was before Russia’s invasion of Ukraine sent oil and other commodity prices into the stratosphere.

U.S. workers are feeling the bite. Wages in February rose just 5.1 per cent, which means they fell in real, or inflation-adjusted, terms. But it’s not quite that simple.

As the chart below shows, real wages in both Canada and the U.S. surged during the pandemic but now appear in decline. It wasn’t that everyone suddenly got a massive pay hike over the past two years, though. The inflation rate cratered, giving people more spending power. But the lockdowns also wiped out so many low-paying jobs that average wages went up dramatically. As those lower-wage jobs have come back, the average has corrected.

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It’s also true that not all those low-wage jobs have returned, so we’re likely starting to see inflation erode paycheques for higher earners as well.

For now real wages in Canada and the U.S. are roughly back in line with the prepandemic trend. Making this an important moment: If inflation climbs faster as spiralling commodity prices filter into supply chains, wages will have to surge to stay on trend.

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