A humming U.S. economy is pushing inflation up to levels that the central bank considers healthy. But there’s a downside: Americans’ paychecks are barely keeping up.

Consumer prices rose 2.9% over the past year, a rate last exceeded in late 2011, the Labor Department said Friday. Core prices—those outside of volatile food and energy-related expenses—climbed 2.4%, the biggest annual gain since September 2008.

The rising cost of things like rent, gasoline and health care is another sign the economy is kicking into a higher gear after years of slower growth. Businesses raise prices when they feel Americans are able and willing to spend more. For much of the expansion, inflation remained stubbornly low, prompting an unprecedented stimulus campaign from the Federal Reserve to counteract its anemia.

But rising prices are now eating up much of Americans’ wages gains, restraining their ability to spend in the future. For just the second time in four years, average hourly earnings—after inflation—fell over the past 12 months, a separate Labor Department report Friday showed.

Workers still came out ahead—barely—but only because they increased the number of hours they worked. Weekly earnings, adjusted for inflation, grew 0.1% in the past year.