Despite the rise in unit labor costs as economic growth has slowed, there is little sign that inflation pressures are on the rise, US Federal Reserve chairman Mr Alan Greenspan said today.
"We see no evidence that those costs are being passed through to final prices in any material way," Mr Greenspan said in response to questions before the US Senate Banking Committee.
He said "fairly extraordinary increases" in energy costs in the US did not seem to showing in the finished goods prices, although they were squeezing corporate profit margins.
Mr Greenspan said the best measure of consumer inflation was the personal consumption expenditure component of the gross domestic product report prepared by the Commerce Department. Excluding food and energy, Mr Greenspan said so-called "core" inflation has been "relatively stable" and showed no sign of accelerating.
"But having said that I would suggest to you as I always do say that we have to be very careful about any evidences of emerging inflationary instability because history has told us time and time again that the most effectively productive economies are those with stable prices," Mr Greenspan added.