Walmart pay raise shows labor market remains strong — and may be adding to inflation worries

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Walmart pay raise shows labor market remains strong — and may be adding to inflation worries
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Wal-Mart is raising its starting wage 17%, pointing to ongoing strength in the labor market that could make it harder for the Fed to fight high inflation.

The giant retailer Walmart on Tuesday said it will boost starting wages to as much as $16 an hour, pointing to ongoing strength in U.S. labor market that could make it harder for the Federal Reserve to fight high inflation.

The retailer WMT is increasing pay for new workers in an effort to keep up with better-paying rivals such as Target TGT . Even with the U.S. economy slowing, competition for labor in many industries such as retail remains fierce. Fed officials don’t object to U.S. workers earning more, but they worry the tight labor market will keep wages rising at an unsustainable pace. If that continues, it would make it harder for the central bank to get inflation back down to its 2% long-term goal.

It was a double-whammy. Businesses simply couldn’t produce enough goods and services to meet the demand, leading to higher prices.

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