Breakingviews: Rich spending will buoy pesky inflation

Americans’ struggle with rising prices is increasingly uneven. While inflation broadly eased in May, the costs of several services jumped again. That trend stands to continue, as the richest Americans have wages moving in the right direction. But that means persistent inflation will weigh more on those least equipped to bear it.

Overall prices increased just 0.1% in May compared to the previous month, the U.S. Bureau of Labor Statistics said Tuesday. Yet several service industries got more expensive, hindering the inflation recovery. Hotel prices rose 2.1% in May, signaling a rebound in travel heading into the summer. Restaurant inflation accelerated to a 0.5% gain. Laundry and dry-cleaning services got 1% more expensive, doubling the April jump.

Several of those services are the targets of wealthy Americans’ spending, and that makes sense, as wage increases suggest that big earners are feeling richer. The top quartile of U.S. earners saw wage growth gain to a 5.6% annual pace in May, according to the Atlanta Federal Reserve. The richest 10% of Americans held nearly half of the $1.5 trillion of unspent pandemic savings at the end of last year, Moody’s Analytics said in May.

Poorer households, meanwhile, are poised to face pricier services with smaller pay gains. Wages for the lowest-earning quartile rose 6.8% in May, which is good, but far lower than a peak of 7.5% last year. It suggests that inflation pressures will keep the U.S. Federal Reserve from cutting interest rates just as one set of spenders fares better than the other.