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Amazon pay rise shows changing inflation dynamics

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An Amazon delivery worker pulls a delivery cart full of packages during its annual Prime Day promotion in New York City, June 21, 2021. REUTERS/Brendan McDermid

WASHINGTON, Sept 14 (Reuters Breakingviews) - Amazon.com’s (AMZN.O)wage hike may be an early warning signal for the Federal Reserve. Bumping up average starting wages to more than $18 an hour, $3 an hour higher than base pay, would be great news for warehouse and transportation workers. But these are just the sort of developments that could make higher inflation more entrenched than is currently anticipated.

A shortage of workers during the pandemic has already forced the e-commerce giant to up its pay game . It was offering twice the U.S. minimum wage, which helped the company almost double its staff over the last year. On Tuesday, it said it would hire an additional 125,000 employees and offer $3,000 bonuses in some locations read more . Earlier this month, Walmart (WMT.N), the largest private U.S. employer, said it would raise pay by at least $1 an hour.

Given there currently are more vacancies than unemployed people , workers have every incentive to try to ensure their pay doesn’t fall too far behind inflation, which was at 5.3% in August, data showed on Tuesday. The more this happens, the more complicated the Fed’s job will become . (By Gina Chon)

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Editing by Swaha Pattanaik and Marjorie Backman

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