Easing real wage growth in CEE
On the radar
- In Romania industrial output growth grew by 0.2% y/y in October.
- Inflation rate in Slovakia remained stable at 3.7% y/y in November. Later today, we will get to see final inflation for November in Poland (10 AM CET) and Croatia (11 AM CET).
- Czechia, Poland and Romania will publish current account data throughout the day.
Economic developments
Today, we look at the real wage growth in the region. Inflation has eased throughout a year (and most recently in November as was reported on Friday) so does nominal wage growth. In real terms the wages have been growing at much slower pace throughout 2025 compared to the last year. The average real wage growth was above 7% in 2024, while in the first half of 2025, it declined toward 5%, and most recently toward 4% With inflation at the targets, we expect further slowdown of nominal and real wage growth. While the situation of households has not worsened, there is little space for further increase in spendings. There has been only slight improvement in consumer confidence that indicates how private consumption growth is likely to develop. We continue to see private consumption as important pillar, but the growth dynamics is likely to ease in 2026.
Market movements
This week will be about central banks. First, the ECB will meet. At its last meeting in October, the ECB left key interest rates unchanged, and it should remain so at this week's meeting. The combination of satisfactory growth prospects and an inflation outlook in the target range of 2% forms the basis for the expectation that there should be no change in key interest rates by the ECB in the foreseeable future. Further, in the region there are two central banks’ meetings. The Czech and Hungarian central banks will decide on key interest rate. In both cases, we expect the key rates to remain unchanged. Government bond yields in major markets and across CEE edged higher last week, with Romania being the only exception, posting a minor decline. On the FX market, the Hungarian forint ended the week slightly weaker against the euro.
Author
Erste Bank Research Team
Erste Bank
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