Inflation may be cooling but not all households are breathing a sigh.

The soaring inflation that has crippled household budgets over the past few years has technically receded, but working Americans say they are not feeling any financial relief because their paychecks haven’t kept pace. 

About 60% of working Americans say their income has lagged inflation has over the past 12 months, according to a new Bankrate survey. That’s up from 55% last year. Even among workers who did get a raise from their employer or found a job with a higher salary, 53% reported that their increase in earnings was less than the on-average 3% inflation hike the U.S. has experienced in 2023. That’s up from 50% last year.

“A gap exists and that’s what I think workers are telling us,” Bankrate Analyst Sarah Foster told CBS MoneyWatch. “Their incomes have come up and they are reaping the benefits of the job market, but prices have gone up even more so they’re still playing this game of catch up,” she said.

U.S. consumers continue to spend 

Still, despite paychecks not keeping pace, Americans have kept the economy humming by spending what dollars they do have.

“Consumers are looking past inflation,” Foster said. “It’s not that they’re OK with it, but they’re continuing to spend.”

Americans have been able to stay afloat in part because of a robust job market and wage increases that are stronger now than they’ve been in recent history, economists said. But Bankrate’s survey suggests that the wave of worker raises aren’t having their intended impact, particularly for low-income earners who make less than $50,000 a year. 

Americans started feeling the impact of inflation in the first quarter of 2021 as the Federal Reserve began trying to cool off the economy after years of lockdown from the pandemic. Starting from 2021 to today, the price of everyday consumer items has risen 16.7% while wage growth has been roughly 12.8%, Foster said. 

Foster’s breakdown lines up with the latest government data on how much worker wages have grown once inflation is factored in.

The typical hourly worker made $10.96 in real earnings in October 2022, according to the Bureau of Labor Statistics. That wage grew only 0.8% a year later to $11.05 in October 2023. Meanwhile, inflation rose 3.2% during that same period. 

To be clear, today’s inflation is relatively tame compared to what it was a year ago — when the rate reached its highest point in 40 years at 9.1% in June 2022. Some economists predict inflation will fall even further next year, perhaps down to 2.4%.

“The inflation fever that has gripped the U.S. economy since early 2021 appears to be breaking,” Kevin Kliesen, a business economist at the Federal Reserve Bank of St. Louis, said Tuesday. “The U.S. economy is entering the fourth quarter of 2023 with solid momentum and a healthy labor market.”