FX.co ★ ECB Wage Tracker Points to Slower Pay Growth Despite Inflation Risks

The ECB’s wage tracker, which monitors pay agreements concluded through the first week of July, shows negotiated wages are expected to rise by 2.3% in 2026 and 2.7% in the first quarter of 2027, down from 3% growth in 2025. The ECB characterized this outlook as “stable,” indicating that wage pressures are easing despite the recent uptick in inflation linked to the conflict in the Middle East.

Policymakers at the ECB regard wage settlements as a crucial indicator of whether higher energy prices might lead to more persistent inflation above the central bank’s 2% target. Thus far, though, there is little sign of a wage–price spiral, as wage growth has not shown any renewed acceleration.

Nonetheless, investors still anticipate that the ECB will deliver a second interest rate increase since the conflict began when policymakers convene in September, reflecting ongoing concern that elevated energy costs could keep inflationary pressures in place.