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

©2022 Bloomberg L.P.

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


Influence and Connection across Healthcare starts with a VOICE
September 29, 2023

In the latest episode of the Healthcare Rethink podcast, presented by FinThrive, host Brian Urban sits down with Alex Maiersperger, the Global Principal Healthcare at SAS. Their conversation charts the role voice plays in influencing and connecting the healthcare industry. Maiersperger, who co-founded the Advancement League, shares his journey from being a healthcare optimist to […]

Read More
Robotic Technology and It’s Impact on Painting Proves That Automation is in The Future
September 29, 2023

The advent of robotic technology is revolutionizing manufacturing and painting processes by elevating them to unprecedented heights. Tony Kerkhove, a seasoned professional in the painting industry, has a firsthand account of the transformative impact of robots within DeGeest Corporation’s paint department, where automation is integrated to streamline workloads and increase efficiency. The robots replicate […]

Read More
Technetics Groups’ Sealing Solutions are Propelling Company’s Expansion
September 29, 2023

The market for sealing solutions is a demanding one, but Technetics Group emerges as a global leader, with over a century of invaluable experience making it a trusted partner in the industry. Their unique solutions, grounded in extensive knowledge and innovative practices, push the boundaries in discovering improved results. The company also harnesses science […]

Read More