ECB Wage Tracker Points to Slower Pay Growth Despite Inflation Risks

The ECB's wage tracker, which monitors pay agreements negotiated through the first week of July, indicates negotiated wages are set to rise 2.3% in 2026 and 2.7% in the first quarter of 2027, down from 3% growth in 2025.

The ECB described the outlook as "stable," suggesting wage pressures are easing despite the recent pickup in inflation driven by the Middle East conflict.

ECB policymakers view wage settlements as a key gauge of whether higher energy prices could trigger more persistent inflation above the central bank's 2% target.

So far, however, there is little evidence of a wage-price spiral, with wage growth showing no signs of reaccelerating.

Even so, investors continue to expect the ECB to deliver a second interest rate hike since the conflict began when policymakers meet in September, reflecting concerns that elevated energy costs could keep inflationary pressures alive.