Wages Not Important Driver of US Inflation, SF Fed Study Finds

Rapid wage growth has not been an important driver of inflation, according to a new analysis published by the Federal Reserve Bank of San Francisco.

The recent run-up in the employment cost index, a measure of wages favored 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 Tuesday on the bank’s website.

“This leaves open other explanations for the high correlation between labor-cost growth and inflation. For instance, recent evidence shows that wage growth ...