Inflation Gets a Boost From Higher Wages and Import Prices, New York Fed Study Says

(Bloomberg) — US consumer inflation, which is running near the fastest pace in 40 years, has been increasingly affected by higher wages and import prices, according to a new study from the Federal Reserve Bank of New York.

“We find that the pass-through of wages and input prices to the US producer price index has grown during the pandemic,” authors Mary Amiti, Sebastian Heise, Fatih Karahan, and Aysegul Sahin said in a posting on the bank’s website Tuesday. “Both the large changes in these costs and a higher pass-through into domestic prices have contributed toward higher inflation.”

The Fed is raising interest rates rapidly to counter price pressures, with 75 basis-point increases delivered at each of its last two policy meetings and the same again potentially on the table when officials gather next month.

Consumer prices rose 8.5% over the year through July, which was slightly cooler than forecast but still far higher than the Fed wants. It targets 2% inflation, measured by a different gauge called the personal consumption expenditures price index, which climbed 6.8% in the 12 months through  June.

The study found that the pick-up in goods inflation in the current economic expansion is the strongest since the 1970s, with prices of services also accelerating recently. It also highlighted rising wages, particularly in service-providing industries, which it tied to the tight labor market where unemployment declined to 3.5% last month, matching a five-decade low.

“Our results indicate that imported input prices and wages have had a significant effect on US domestic prices in recent months,” the authors wrote. “This large effect stems both from their relatively larger increases and a higher pass-through rate.”

They also found that prices in the traded sector have become more correlated with foreign competitors’ prices, “most likely because all firms are experiencing the same shocks.”

 

More stories like this are available on bloomberg.com.

©2022 Bloomberg L.P.

Follow us on social media for the latest updates in B2B!

Image

Latest

visitor management solution
Reinventing Visitor Management Solution with Symmetry GUEST
April 2, 2025

In an age where speed and security are paramount, the traditional paper logbook is becoming a relic of the past. AMAG Technology’s Symmetry Guest system offers a modern, digital solution that redefines the way organizations welcome and manage visitors. Gone are the days of long lines and confusion at the front desk—Symmetry Guest empowers hosts…

Read More
AMAG
Driven by Customers, Defined by Innovation: Inside AMAG’s Customer-Obsessed Approach
April 2, 2025

AMAG Technology continues to strengthen its customer-obsessed culture by actively listening to both internal and external voices. As shared by Kyle Gordon, Executive Vice President of Global Sales, Marketing, & Commercial Excellence, the company is focused on improving processes, responding with speed, and driving innovation—while honoring its legacy and delivering unique value within the industry.

Read More
biotech
Biotech Moves Smarter: IDDI Powers Data-Driven Drug Innovation
April 2, 2025

As biotech innovation accelerates, small and mid-size pharmaceutical companies are becoming key players in bringing new treatments to market. Yet many of these organizations face steep challenges when navigating clinical trial design, regulatory approval, and data integrity. According to a McKinsey Global Institute report, industries like biotech could help generate up to $50 trillion…

Read More
AMAG Technology
AMAG Technology Drives Positive Change, Product Innovation, and Stronger Partnerships with the Customer in Mind
April 2, 2025

At AMAG Technology, customer obsession is at the heart of everything the company does. Customer Relationship Manager Aimee Walsh shares how AMAG embraces positive change, enhances its products, and strengthens partnerships—all with the customer in mind. Her insights reflect AMAG’s ongoing commitment to evolving alongside customer needs and delivering meaningful solutions.

Read More