Employers spent 4% more on wages and benefits last year as workers received larger pay raises in a tight labor market, rebounding economy and period of accelerating inflation marking an increase not seen since 2001.

The US employment cost index a quarterly measure of wages and benefits paid by employers showed that costs continue to rise at the highest rate in two decades. The fourth quarter gain compared with a year ago was 4% on a non-seasonally adjusted basis, the Labor Department’s had Friday.

Still, the figures offered a sign that labor cost increases could be easing, with the Labor Department reporting a seasonally adjusted 1% rise in compensation for the fourth quarter down from with a 1.2% increase the previous three months. Separate economic figures show that the Federal Reserve’s preferred measure of inflation, the core personal consumption expenditures Price Index accelerated 4.9% in December 2021 over the prior year, and household spending fell 0.6% Last month, the Commerce Department said Friday as consumers pulled back on shopping for goods during the last month of the holiday season.

Rising pay and benefits are putting more money in workers pockets. average hourly wages rose 4.7% in December from a year earlier, but not enough to keep pace with rising prices. Inflation recently hit its fastest pace in nearly four decades amid supply and demand imbalances for both goods and labor related to the COVID 19 pandemic.