WASHINGTON (Reuters] – The U.S. unit labor cost rose more than expected in the third quarter. It suggests that inflation might remain high for a long time.

On Tuesday, The Labor Department reported that the annualized pace of unit labor costs (the price per unit of labor) accelerated by 9.6% last quarter. This was an increase from the November 8.3% rate.

The April-June quarter saw labor costs rise at a rate of 5.9%. Instead of the 4.8% reported, they increased by 6.3%.

Reuters polled economists to forecast that unit labor costs will rise at an unprecedented 8.3% rate.

Pandemic-related supply chain disruptions have led to inflation exceeding the Federal Reserve’s target of 2%. As companies compete for employees, wages are rising too.

The hourly rate of compensation rose to 3.9% in the third quarter rather than 2.9% as reported previously.

The rise in labor costs led to a decline in worker productivity which was revised downwardly at 5.2% last quarter. In the past, productivity was reported to have fallen at 5.0%. In the quarter of April-June, it grew by 2.4%.

Productivity fell by 0.6% in the third quarter 2020 compared to the previous quarter. The previous report stated that productivity had declined by 0.5%. The rate of hours worked rose by 7.4% last quarter. This is an increase from the 7.0 pace previously reported.