Wages are surging across the rich world

NOT LONGIMFOECD ago pundits obsessively checked the latest statistics on covid-19 cases. Now they are doing the same with the inflation numbers. American consumer prices rose by 5.4% in the year to September, according to figures published on October 13th, exceeding forecasts. A survey from the New York Federal Reserve released the previous day showed a small pickup in consumers’ inflation expectations. In its semi-annual report on the global economy the warned that the prospects for inflation were “highly uncertain”. Soaring energy costs will push up consumer prices in the near term. Pay, too, is surging, as red-hot demand runs up against a shortage of workers. Does it stand to fuel further price rises?When covid-19 first struck, most forecasters expected bosses to slash bonuses and yearly rises, or even to cut basic pay, as they did after the global financial crisis in 2007-09. Although wage growth did slow modestly early in the pandemic, that restraint has since been abandoned. Oxford Economics, a consultancy, finds that pay in the rich world is growing at a rate well above its pre-pandemic average. The acceleration in compensation per worker across the , a club of mostly rich countries, is equally arresting (see chart 1).