By Yasin Ebrahim

Investing.com – Tight labor markets fueled robust wage growth nationwide at a time when supply chain issues continued to keep the pace of inflation elevated, according to the Federal Reserve’s Beige Book released Wednesday.

“Economic activity across the United States expanded at a modest pace in the final weeks of 2021 … [but] growth continued to be constrained by ongoing supply chain disruptions and labor shortages,” the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Jan. 3.

According to the report, robust wage growth has meanwhile contributed to rising inflation pressures, driven by tight labor market conditions. “[M]any contacts noted that wage gains among low-skill workers were particularly strong, and compensation growth remained well above historical averages.”

Businesses have been able pass cost onto customers despite an elevated inflation rate, now at the fastest pace since 1982. However, prices rose less quickly than before, according to the Fed.

The impact of the Omicron variant, meanwhile was also front and center, with “most districts noted a sudden pull back in leisure travel, hotel occupancy and patronage at restaurants as the number of new cases rose in recent weeks,” according to the report.