Berlin (Reuters) – According to the Bundesbank, the strong wage agreements are likely to prompt companies to raise prices.
“There is much to suggest that companies will partly pass on the increased wage costs in prices over the course of the year,” says the monthly report published on Wednesday. “Second-round effects on prices are to be expected” – this describes the danger that prices and wages will continue to rock each other up and that inflation will remain high for longer.
“The meanwhile broad-based and quite stubborn inflation is increasingly leaving its mark on wage increases,” stressed the Bundesbank. The possibility of paying inflation compensation premiums is also being increasingly exploited in areas that are not bound by collective bargaining agreements. This was initiated by the federal government and allows employers to grant their employees an amount of up to 3,000 euros tax- and duty-free. “With a view to the ongoing collective bargaining rounds, the expected improvement in the economy and the reduced uncertainty regarding the energy supply are encouraging efforts to compensate for the previous real wage losses more than before,” says the monthly report.
Consumer prices rose by an average of 7.2 percent in March compared to the same month last year. According to the Bundesbank’s forecast, the rate of inflation is likely to fall in the coming months – “but only very gradually”. “The still extraordinarily high price increases for non-energy components, the price pressure that can still be felt along the supply chains and the strong wage growth are counteracting the dampening contribution of falling energy prices,” write the Bundesbank economists.
Recently, the unions were able to push through significant wage increases. The 2.5 million employees in the public sector at federal and state level will receive a tax and duty-free special payment of 1,240 euros in June. Another 220 will follow in the months from July to February 2024. The collective agreement for the 160,000 employees of Deutsche Post looks similar. There is a two-stage wage increase of up to 13 percent for the 800,000 employees in temporary work.
(Report by Rene Wagner, edited by Reinhard Becker. – If you have any questions, please contact our editorial team at [email protected])