Serious Implications

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The March Stagflation Index (SFI) rose as wage gains outpaced the change in cost of living, which actually fell slightly. This bit of good news ended two months of rising prices and slower wage growth.

The March data from the Bureau of Labor Statistics indicates that wages rose faster than inflation for non-managerial workers in the private sector, who make up about 80% of the American workforce. The key data:

Consumer Price Index (CPI) -0.1%
Average Hourly Earnings (AHE) +$0.04 or +0.22%
Average Hourly Wage $18.50/hour

Calculating the March percent increase in wages adjusted for inflation:
AHE – CPI = 0.22 -(-0.10) = 0.32
March Stagflation Index = 0.32 X 100 = 32

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The Simplified Stagflation Index (SFI) finished 2007 by climbing to +10 in December, a bit of good news and ending a three-month run of negative values. For the year, however, the news is not so good.

Totals for 2007:

Consumer Price Index +4.2 Percent
Average Hourly Earnings +3.7 Percent
Real Average Hourly Earnings (Corrected for Inflation) -0.5 Percent
Simplified Stagflation Index -51.

The SFI is derived from Consumer Price Index and Average Hourly Earnings data published monthly by the U.S. Bureau of Labor Statistics. There is more information about the SFI here

Update and Correction:
Due to a mixup in units, the original post below turns out wrong. The Bureau of Labor Statistics lists the CPI as a percent, while expressing the change in Average Hourly Earnings as US currency ($). The data for June is as follows:

June CPI +0.2 %
June AHE $0.08
June AHE +0.42 percent

Therefore, Real Average Hourly Earnings rose (0.42-0.2) = 0.22%, which is good news.
Sorry for the error.

More at Simplified Stagflation Index.