Eurozone wage growth may accelerate next year The ECB is wary of energy shocks being transmitted to wages

The Zhitong Finance App learned that the ECB said that wage growth in the Eurozone may accelerate in 2027, but it will still be far below past highs. The bank is evaluating the risk of inflation brought about by the war in Iran. Wage tracking indicators released by the ECB on Wednesday forecast that the annual wage growth rate in the first quarter of next year will be 2.7% and 2.8% in the second quarter. This is stronger than the second half of 2026, but is still far below the peak of 5.2% in 2024.

“Wage tracking indicators for the first half of 2026 were lower, reflecting the mechanical downward impact of one-time payments made initially in the second half of 2024 and not repeated the following year,” the ECB said in a statement. “These effects will completely subside in the second half of 2026.”

Policymakers are evaluating how high energy costs can be transferred to other prices through channels such as wages. They raised interest rates for the second time since June last week, and the market expects further rate hikes to push inflation back from above 3% to the target level of 2%.

The ECB stressed after this month's policy meeting that wages “have not shown a substantial response to the energy shock at this stage.” However, the bank warned that the impact could still intensify, and disruptions to prices and wages exceeded current expectations.

Last week's data showed that per employee pay increased by 3.3% in the second quarter, down from 3.5% in the first quarter.

Although some officials believe that such developments will help ease concerns about the second-round effects, others say that the ECB cannot sit back and wait for these results to become a reality because it may be too late to act until then.