FX.co ★ Euro Area Wage Growth Slows to 2.44% in Q2

Negotiated wages in the euro area rose 2.44% year-on-year in the second quarter of 2026, easing from a revised 2.56% in the previous quarter and remaining far below the 5.55% peak reached in 2024. This moderation in wage growth offers some relief to the European Central Bank (ECB) as it evaluates the risk that higher energy costs stemming from the war in Iran could spill over into broader inflation.

Eurozone inflation accelerated to 2.9% in July, above the ECB’s 2% target, while stronger-than-expected economic growth has intensified pressure on policymakers to consider further interest rate increases after June’s quarter-point hike. Most investors and economists anticipate another hike next month.

The ECB’s wage tracker indicates a gradual acceleration in pay growth through early 2027, though wage increases are still expected to remain well below the peaks seen during the earlier inflation surge. ECB President Christine Lagarde has emphasized that wage developments remain moderate, with limited evidence so far of significant second-round inflation effects.