The central bank meets on policy on Tuesday, and is widely expected to keep its main policy rate at 13%, the highest in the European Union, as it resists government pressure to ease policy. Fast-falling purchasing power has hit economies across central Europe as price growth easily outpaces wage gains, hitting households' budgets and causing them to put off purchases or scale back shopping. But with the region's labour markets among the tightest in the EU, companies are often being pushed into bigger pay increases. Last week, carmaker Audi's Hungarian unit agreed to a 17% rise in its base pay from April. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Hungary's wage growth falls behind inflation ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Jason Hovet in Prague and Krisztina Than in Budapest; Editing by Bernadette Baum)
March 28 (Reuters) - Hungary's gross average wages grew 16.1% year-on-year in January, the 13th
straight month of double-digit growth, although the rise trailed
sky-high inflation.
With inflation accelerating to a quarter-century high of
more than 20% in recent months, wages have struggled to keep up,
putting a drag on Hungary's economy as it tipped into a mild,
technical recession in the second half of last year.
But with pay still growing by double digits, analysts warn
inflation pressures are likely to keep the central bank sounding
a hawkish tone.
"We continue to believe the tight labour market poses an
upside inflation risk," ING economist Peter Virovacz said.
He said with inflation projected to slow, wages could again
show growth in real terms in the second half of 2023.
"Then the economy will also be recovering and the demand for
labour from companies could strengthen," he said.
"We continue to believe that there is a substantial risk of
inflation sticking at high levels permanently."
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.