Peter Morici: Why inflation threatens the middle class

Buffeted by slow growth and too few decent paying jobs, Americans now have to deal with more inflation.

In January, consumer prices rose 0.6%. Although that was driven by a surge in energy prices not likely to repeat, core inflation — prices less food and energy — has been greater than the Fed’s target of 2% for the last year.

Yet, economic growth is not likely to accelerate enough to support wages that rise as fast as prices going forward.

Donald Trump’s promised tax cuts and reforms, infrastructure and deregulation initiatives are likely to face a host of obstacles. Those include congressional Republican opposition to further increasing the budget deficit, opposition from adversely affected parties like Wal-Mart WMT, +0.26%and other retailers regarding border tax adjustments, and legal challenges to executive orders — for example, easing labor market and financial regulations.

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