WASHINGTON (Reuters) — Inflation pressures grew slightly across most of the United States from April to mid-May, the Federal Reserve said on Wednesday in a report that also pointed to rising labor costs for American companies.
The Fed's Beige Book, a collection of anecdotal information from business contacts nationwide, found that labour markets appeared to be tightening despite "modest" job growth.
"Tight labor markets were widely noted in most districts," the Fed said, referring to the U.S. central bank's 12 regional branches. "Price pressure grew slightly in most districts."
The report could make Fed policymakers more comfortable that inflation is on track to rise back to the central bank's 2 percent target as they consider whether to raise interest rates in the coming months.
As has been customary since the 2007-2009 recession, the Beige Book described economic growth as modest.
Tighter labour markets appear to be fuelling higher wages for entry-level and lower-skill positions in parts of the South, while companies reported more wage pressures for higher skilled employees in the West and parts of the Midwest, according to the report.
In the New York district, which includes the New England states, a sizable share of contacts in the service sector reported higher wages.
Rising wages are seen by many economists as a harbinger of faster rates of inflation.
The Beige Book was compiled by the Minneapolis Fed with information collected before May 23, 2016.