The latest data from the European Central Bank’s wage tracker indicates that union-negotiated pay increases will remain relatively stable, with a minor uptick to 2.7% expected in the first quarter of next year. ECB officials view these outcomes as a primary barometer for determining whether energy-driven price hikes will entrench inflation above their 2% target. To date, however, the bank has observed no indications that businesses are fueling a second round of price rises to protect profit margins.

ECB President Christine Lagarde confirmed last week that current data series provide no evidence of secondary effects, even as investors anticipate another interest rate hike this September. Economists attribute the cooling wage outlook to weak growth momentum and pervasive economic uncertainty. While compensation per employee is forecast to grow by 3.2% in 2026, down from 3.9% in 2025, real wages are expected to see a slight recovery as annual inflation—recorded at 2.8% in June—eventually moderates from its earlier peaks.