WASHINGTON, (Reuters) – The U.S. saw an increase in unit labor costs during the third quarter. However, productivity fell at its fastest pace since 1981. This adds to concerns that inflation may continue for a long time.

According to the Labor Department, unit labor costs (the price per unit of output) increased by 8.3% annually in the last quarter, after increasing at 1.1% during the April-June quarter. The jump in labor costs in the last quarter, excluding the coronavirus distortions that will occur in 2020 was the greatest since the beginning of 2014.

The rate at which labor costs increased was 4.8% compared with a year earlier.

Reuters polled economists and found that unit labor costs were expected to accelerate at 7.0%.

Following news that wages rose in the last quarter of 2011, the report was released. The labor market has been disrupted by the pandemic, which led to 10,4 million jobs available as of August 31st.

The Federal Reserve is proving untrue to its narrative of high inflation as transitory with strong wage gains and rising rents.

The Fed targets a 2% inflation target. Inflation has risen to a level that is far above this. Although the U.S. central banks announced Wednesday they would begin reducing their monthly bond purchases for this month, it maintained that high inflation is temporary.

After rising by 3.5% in the previous period, hourly compensation rose at 2.9% in the third quarter. Workers productivity fell by 5.0% in the last quarter due to an increase in labor costs. The drop was the most significant since the second quarter 1981. This followed an increase of 2.4% in April-June.

Economists expected that productivity would fall by 3.0%. Productivity fell 0.5% compared to the third quarter 2020. The rate at which hours worked rose by 7.0% last quarter, compared to the 5.9% recorded in the previous quarter.