I make roughly $93,000 a year. A 1 percent increase in my salary would be $930 a year. If the cost of living goes up 3 percent, and my salary only goes up 1 percent, then I have a net loss of 2 percent in terms of spending power. So, I may have received $930 more over the course of the next year, but must spend $1,860 more to live. I don't call that an increase, do you?
The above is a rough example. If you take into account the volatility of the oil industry and the cost of food, health care, and other expenditures, they that deficit of spending power grows.