A labor shortage and a relatively strong economy contribute to high prices. Some experts worry about inflationary expectations.
The central bank watches for signs of wage inflation because it can drive price inflation.
Wages are rising fast, but not as fast as prices. When inflation expectations drive workers' demands for higher pay, inflation can spiral out of control.
Even though sentiment has tanked, a New York Fed survey finds that consumers expect inflation to ease in the future.
The central bank will scrutinize the employment cost index for 2021’s fourth quarter for signs that rising pay could fuel rising prices.