The final word nightmare for a central banker is a wage-price spiral so you possibly can perceive a give attention to wages generally however officers want to know it is a lagging indicator of inflation, maybe essentially the most lagging indicator.
ECB officers droned on about wage inflation for months and now it is clear that it isn’t an issue they usually have dropped the priority (however nonetheless aren’t prepared to chop). Within the US, there was a freak-out a few +0.6% m/m rise in common hourly earnings final month nevertheless it’s been revised decrease and it is now clear that was skewed by a one-off drop in hours labored.
US wages are actually up 4.3% y/y which is a traditional rise when factoring in productiveness.
The WSJ’s Nick Timiraos highlights a broader measure of wage inflation as we speak, noting that “the index of aggregate weekly payrolls for private-sector workers, which combines hiring, wages, and hours, was up 5.3% over the last 12 months and looks like this over the last year:”
It is proper again to the pre-pandemic pattern.
Proper now central bankers are looking out the home for the inflation boogey-monster however they’ve appeared in each closet and underneath each mattress and it is simply not there.
There’s the speak about sticky providers inflation however I simply do not see why it should not return to pre-pandemic norms.
