Euro zone: The key situation of wages and prices in the recent period

In the recent period in the euro zone, there has been: An acceleration in wages and in labour costs, linked to companies’ hiring difficulties; No acceleration in prices (no rise in core inflation). This has important implications: Labour market pressures are not leading to a more restrictive monetary policy; Corporate profit margins are going to fall. These wage and price trends show that: There is still a Phillips curve effect in the euro - zone labour market, even though it has weakened; Competition (internal and external) in the euro zone’s goods and services markets is sufficiently intense that prices are not able to keep up with costs.