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SACRAMENTO, Calif. — Triggered by inflation, California’s minimum wage is expected to increase to $15.50 per hour in the new year, Gov. Gavin Newsom said this week.

Newsom announced the wage bump Thursday as he unveiled an $18.1 billion package proposed to reduce the impact of inflation. It comes as California residents face prices rising at their highest rate in four decades.

The governor said the increase, 50 cents more than the scheduled 2023 rate, was due to a provision in state law requiring a bump when inflation exceeds 7%. It will take effect on Jan. 1, 2023.

“The wage increase will benefit millions of California households that are struggling to keep pace with the highest rate of inflation in decades,” Newsom’s statement reads.

Local governments can impose their own minimum wage higher than the state’s required rate. That’s the case in San Diego, where the minimum wage has been $15 since the start of 2022.

The governor’s proposal also includes $11.5 billion in tax refunds, in the form of the previously announced $400 checks for vehicle owners, $2.7 billion in emergency rental assistance, $1.4 billion to help residents with overdue utilities bills and several other programs.

It’s all intended to mitigate the effects of a brutal year for the average consumer’s pocketbook.

“The COVID-19 pandemic has resulted in persistent supply chain disruptions and labor market frictions have driven inflation to its highest rate in 40 years,” Newsom’s office wrote. “These conditions have further been exacerbated by Russia’s war in Ukraine.”

In a more promising sign, economists say inflation may have finally peaked this week. Consumer prices rose 8.3 percent over the 12 months ending in April, according to the Labor Department’s consumer price index, down slightly from an annual rate of 8.5 percent in March.

James Knightley, a chief international economist at ING, said he expected the yearly inflation rate to continue to fall as consumers spend more money on in-person services and less on products impacted by the supply chain issues that Newsom alluded to.

KSEE’s Dom McAndrew contributed to this report.