Consumer prices rose 2.9 percent in the year since June 2017, a five-year high, while hourly wages fell 0.2 percent in the same period, according to federal data released Thursday.

The consumer price index (CPI) rose almost three percent over the past year, the highest annual increase since February 2012, according to federal data. But hourly wage earnings adjusted for inflation decreased despite record-low unemployment and U.S. businesses struggling to fill thousands of jobs.

Economists have struggled to understand why wage growth has lagged while unemployment lingers near 4 percent and growth nears closer to 3 percent of GDP. Consumer prices are starting to rise at levels close to the Federal Reserve’s target after years of meager increases.

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The Fed is keeping a close eye on inflation as it proceeds with several planned interest rate hikes. The central bank is eager to prevent higher spending, tax cuts and the burgeoning trade war from driving prices to unsustainable highs.

Even so, the CPI rose only 0.1 percent in June, slightly below analysts’ expectations. Economists had expected increasing economic growth and consumer spending to drive further price hikes last month.

Consumer prices minus food and energy goods rose 0.2 percent in June, and 2.3 percent in the past 12 months. Food prices increased 1.2 percent in June, while energy prices rose 12 percent.