Details
- The European Central Bank’s latest wage tracker indicates negotiated pay growth will remain around 2.6% in 2026, unchanged from previous estimates.
- The tracker includes collective wage agreements signed up to the end of May.
- Pay growth is slowing from 3.0% in 2025, suggesting eurozone wage pressure remains contained despite higher energy costs linked to the Middle East conflict.
- The ECB has been watching for signs that workers could demand compensation for rising prices, creating a wage-price spiral.
- The central bank has said wage growth between 2% and 3% is broadly consistent with its 2% inflation target.
- The ECB raised its benchmark interest rate to 2.25% last week after inflation moved above 3%.
- The latest wage data may reduce pressure for another immediate rate increase, though policymakers are still debating whether a July move is needed.
- Markets still expect one or two additional ECB rate increases over the coming year, with the next move priced in by October.
- The ECB said the tracker is not a forecast and may be revised as new wage agreements are signed.
What Else
If wage growth remains contained, policymakers may have more room to move gradually even as inflation stays elevated. The next focus will be upcoming inflation data and whether energy costs feed into broader pay demands.
