According to a Federal Reserve Bank of Atlanta survey, businesses in the Sixth District now expect wages to climb by just under 8.0% y/y in 2022. Given how tight the labour market is, it is no surprise that, on average, companies are planning to raise wages in excess of inflation.
Today’s Atlanta Fed median wage tracker for December confirms the step change in wage growth, accelerating to 5.2% y/y, the fastest since June 2001.
This looks a bit more like a wage-price spiral now. For some sectors, wages and inflation are already feeding into each other. Transportation & warehousing and leisure & hospitality are two cases in point.
The services ex-energy CPI climbed 0.30% m/m and 3.68% y/y in December, the fastest annual rise since February 2007. Even so, it was still below the core services deflator, which rose 4.11% y/y in November.
