ECB survey points to stickier underlying inflation

FRANKFURT (Reuters) – Core inflation in the euro zone will come down more slowly than previously thought as wage growth is seen picking up in a tight labour market, a European Central Bank survey showed on Friday.

The latest Survey of Professional Forecasters (SPF) was presented to ECB policymakers this week as they decided to raise interest rates for a ninth consecutive time but also signal that the next step was still undecided and a pause was on the cards.

The SPF showed that so called core prices, which are closely watched by the ECB and exclude energy, food, alcohol and tobacco, were expected to grow by 5.1% this year and 3.1% next year, faster than in the poll’s previous round in May.

“Respondents indicated that the upward revisions reflected recent data outturns showing more persistence than expected as well as higher forecast wage growth,” the ECB said.

Forecasts for the unemployment rate were revised down for this year and the next — to 6.6% and 6.7% respectively — despite slightly lower growth expectations for 2024 and 2025.

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