There was upward pressure on wage change from the low and declining unemployment rate and from the increases in the minimum wage. But this was moderated by the effect on wage change of lower price inflation. There was also a sharp acceleration in productivity over 1997, which held down unit labor costs.
In my view, most of this acceleration in productivity was cyclical, meaning it was in response to the faster pace of output growth. Cyclical increases in productivity mainly, in my view, result in higher profits, rather than lower prices. But, there likely was some small moderating influence on inflation from such a cyclical increase in productivity.