With productivity slowing down and the dollar trading around multiyear lows against the yen and euro, concerns about inflation are starting to escalate -- again. But consumers, investors and Federal Reserve officials have no reason to panic, and upcoming inflation reports are likely to hammer home that message. The producer price index is expected to climb just 0.1% in November, reflecting a recent decline in oil prices while the core rate is seen rising 0.2%. Meanwhile, the headline and the core consumer price index, due out next week, should increase 0.2%. Recent worries about inflation have centered on declining productivity, the weak dollar and soaring commodity costs. In the third quarter, output per hour worked rose by 1.8%, the slowest quarterly increase since the final three months of 2002. When productivity softens and workers are producing fewer goods and services each hour than they once did, businesses sometimes consider raising prices to increase profits. Ethan Harris, a senior economist at Lehman Brothers, thinks output growth will slow next year to 2% from about 3% currently, but said this rate is still "robust enough to hold core inflation in check." Historically, he said, swings in productivity have had more impact on profit margins than inflation. "Companies are not throwing in the towel on their productivity focus and may in fact be embarking on a renewed round of cost-cutting to protect their margins," said Merrill Lynch economist David Rosenberg. Firms like Colgate-Palmolive ( CL), Bayer ( BAY), JDA Software ( JDAS) and Honeywell ( HON) all plan to lay off workers in the U.S. in an effort to reduce expenses and boost profits. While wages have picked up this year from abnormally low levels, there is still plenty of slack in the labor market and little evidence that labor costs are becoming a concern. In theory, higher wages lead to higher prices, though this doesn't always happen.