Tag Archives: Euro area wage growth

Strong wage growth should support the recovery of euro area inflation in the coming months. Euro area flash HICP rose from 2.1% year on year (y-o-y) in September to 2.2% in October, in line with expectations and the highest level since December 2012. Crucially, core inflation (HICP excluding energy, food, alcohol and tobacco) rebounded from 0.9% to 1.1% in October. Energy inflation rose to 10.6% y-o-y from 9.5% y-o-y in...

Strong wage growth should support the recovery of euro area inflation in the coming months.Euro area flash HICP rose from 2.1% year on year (y-o-y) in September to 2.2% in October, in line with expectations and the highest level since December 2012. Crucially, core inflation (HICP excluding energy, food, alcohol and tobacco) rebounded from 0.9% to 1.1% in October. Energy inflation rose to 10.6% y-o-y from 9.5% y-o-y in September. Food, alcohol and tobacco inflation eased, by 0.4 percentage...

The latest signs that wages are picking up together with drops in unemployment should help push the ECB along the road of policy normalisation.Wage growth is an important input in the ECB’s reaction function, and so far it has failed to respond to the narrowing of the output gap. It could be the normal behaviour of a lagging indicator, especially as labour market slack is likely to be larger than what the drop in headline unemployment would suggest. Or, it could be that “the slope of the...