Jerome H. Powell, the Fed chair, has increasingly acknowledged that inflation is lasting longer than central bankers had expected. Fed officials believe inflation will fade as supply chain snarls unravel and consumer demand for goods cools, but it remains unclear when that will happen. Janet L. Yellen, the Treasury secretary, has predicted that rapid price jumps will cool by later next year.
The inflation data released on Friday confirm what more timely measures like the Consumer Price Index had already shown: For now, price gains remain unusually brisk. Supply chains are struggling to keep up with strong demand, thanks to virus-tied factory shutdowns, clogged ports and a shortage of transit workers, among other factors. It is hard to buy a kitchen table or a used car, and the prices of many goods have jumped sharply.
Demand has yet to drastically fade. Personal spending continued at a solid pace in September, data released on Friday showed, climbing 0.6 percent from August — slower than the prior month, but in line with what economists had expected.
Spending could moderate in the months ahead as federal stimulus dries up and households deplete savings that they built up during the pandemic. A measure of incomes that includes benefit payments decreased 1 percent last month as more generous unemployment payments expired and other pandemic relief programs slowed or stopped payouts. The personal savings rate also fell to 7.5 percent, down sharply from recent months and roughly where it stood before the onset of the pandemic.
But just as government help wanes, labor income is climbing faster.
Americans are earning more from work, data released Friday showed: A measure of employment costs that traces wages and benefits climbed by 1.3 percent in the third quarter, more than the 0.9 percent economists had expected and the fastest pace in data since the series started in 1996.
On an annual basis, the Employment Cost Index climbed 3.7 percent, the fastest pace since 2004. Wage gains are especially rapid in service industries, which have been struggling to lure back workers as they reopen from pandemic lockdowns.
Strong wage gains could help to sustain demand and may keep inflation higher than normal, especially as companies try to remain profitable even as they pay more for labor. The Fed is closely watching wages and measures of inflation expectations, which have risen in recent weeks, as it tries to assess whether price gains might spiral out of control.