Fed: Wages are not a key driver of US inflation

The recent run-up in the employment cost index “explains only about 0.1 percentage point” of the three percentage-point increase in consumer price inflation excluding food and energy, San Francisco Fed economist Adam Shapiro said. — Reuters

SAN FRANCISCO: Rapid wage growth has not been an important driver of inflation, according to a new analysis published by the Federal Reserve (Fed) of San Francisco.

The recent run-up in the employment cost index, a measure of wages favoured among economists and policymakers, “explains only about 0.1 percentage point” of the three percentage-point increase in consumer price inflation excluding food and energy, San Francisco Fed economist Adam Shapiro said in an article published on Tuesday on the bank’s website.