The US Consumer Price Index jumped by an unexpected 1.1 percent last month amid spiraling energy prices, according to Labor Department figures released yesterday. June’s inflation spike—the sharpest since 1982—brought the annual inflation rate to 5 percent. Economists had been predicting a monthly increase of .7 percent, and June’s rise was significantly higher than the .6 percent increase seen in May.

Producer prices showed an even sharper increase of 1.8 percent, according to the Labor Department. The producer price index has increased by 9.2 percent in the past year in the sharpest increase since 1981. Energy prices led the increase, jumping by 6.6 percent, while transportation costs also shot up as airlines increased ticket prices by 4.5 percent.

Wage levels, meanwhile, decreased by .9 percent after adjusting for inflation. Real wages have fallen by a full 2.4 percent in the past year.

Such drastic cuts in real wages—representing a massive transfer of wealth from the working class to the very rich—are sending shockwaves through the whole of American society.

In other words, the Fed intends—if it can—to tighten the money supply and deepen the US economic downturn to prevent any wages offensive by the working class. In case anyone missed the point, Bernanke reiterated the claim in the next paragraph, saying, “In light of the increase in upside inflation risk, we must be particularly alert to any indications, … that the inflationary impulses from commodity prices are becoming embedded in the domestic wage and price-setting process.”

In essence, Bernanke and his fellow Fed members are warning that the sharp decreases in real incomes will inexorably lead millions of working people to an open struggle for livable wages. But under conditions where businesses—aided by the Fed—are seeking to pass on the full cost of the crisis to the masses of working people, such struggles will naturally turn into an open fight against the capitalist system itself. This is the nightmare of not only Bernanke, but of the entire financial oligarchy and its political establishment. Indeed, they see the suppression of such a movement as “very costly.”