Workers’ wages are rising briskly, a factor contributing to four-decade high U.S. inflation.

Average hourly earnings grew 5.2% in July from a year earlier, and annual wage gains have exceeded 5% each month this year, the Labor Department said Friday. The rapid earnings growth adds to other evidence that employers are continuing to increase pay as they try to find and keep workers in a tight job market.

Wage gains help consumers spend money in the face of higher prices for restaurant meals, groceries, and lodging. But many companies are having to pay more for labor at the same time that other business expenses are rising, including transportation and logistics, said Omar Sharif, head of forecasting firm inflation insights, LLC the entire cost structure of operating a business has increased including wages, Mr. Sharif said that’s allowing firms in a high inflation environment to pass those costs on to consumers.

Higher wages and job growth combined with a contraction in overall economic output are weighing on labor. Productivity is a measure of goods and services produced per hour worked. It fell at a seasonally adjusted annual rate of 4.6%. For its second straight quarterly decline. The Labor Department said on Tuesday