Negotiated pay increased 4.7 per cent from a year ago in the first quarter, the ECB said on Thursday. That’s up from 4.
5 per cent in the final three months of 2023 and matches a record set in the third quarter of last year. Most economists had anticipated a drop or a stable reading.A key gauge of euro-area wages failed to slow at the start of 2024 – a warning sign to European Central Bank officials counting on a slowdown to maintain the retreat in inflation.
The data arrive just two weeks before the ECB is widely expected to begin lowering interest rates for the first time since a barrage of hikes to contain runaway inflation.While consumer-price gains have slowed significantly, policymakers say a return to the 2 per cent target hinges on the interplay between wages, corporate profits and productivity.
One challenge for officials assessing pay trends is that salaries are hammered out in different ways across the 20-nation currency bloc. While Germany’s current numbers are swollen by the implementation of deals struck in the past, growth has already started slowing in some of the region’s other large economies.
In March, the central bank forecast that growth in that gauge will average 4.5 per cent this year and slow to 3 per cent in 2026. That’s a level it deems broadly in line with its inflation goal.
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