The eurozone’s inflation problem is shifting into a brand new part, the place the motive force of home value pressures is shifting from firm earnings to wages, officers on the European Central Financial institution mentioned this week as they tried to lay the groundwork for an extended interval of excessive rates of interest.

Employees, who’ve borne the brunt of excessive inflation within the eurozone, are anticipated to recoup a few of their misplaced buying energy by getting wage raises this yr. That follows a yr when corporations had been in a position to enhance earnings amid quickly rising costs and demand for companies, reminiscent of eating places and journey, after pandemic lockdowns.

This yr, wages are anticipated to catch up, officers on the financial institution mentioned in current days.

That provides to the problem that policymakers face as a result of wages alter slowly and danger making inflation much more persistent, conserving it above the central financial institution’s 2 p.c goal. That might drive them to take harsher motion to gradual the economic system.

However policymakers are hopeful they’ll keep away from this consequence, and don’t consider the area is in a wage-price spiral, wherein wages chase costs larger and inflation dangers operating uncontrolled.

“We will see wages rising fairly strongly however inflation nonetheless dropping,” Philip Lane, the chief economist of the financial institution, mentioned in an interview on Wednesday, on the sidelines of the financial institution’s annual convention in Sintra, Portugal. “As a result of the profitability was so excessive final yr, within the combination, there may be room for earnings to fall to soak up a few of these wage will increase.”

However crucially, attaining this purpose relies on corporations letting their earnings take up larger wage prices and never attempting to go them on to prospects by way of larger costs.

That is simply the newest concern raised by the central financial institution about company earnings and inflation. Different policymakers on the financial institution, together with the chief board member Fabio Panetta, warned this yr that corporations may hold attempting to enhance their revenue margins at the same time as their prices had been falling, which might delay inflation.

From the center of final yr to the tip of March, about 60 p.c of home value pressures have come from earnings, knowledge printed on Thursday by the central financial institution confirmed.

This yr, “we do suppose we’re going to begin to see corporations realizing that they’re hitting the restrict of what their prospects can take up,” Mr. Lane mentioned.

As earnings have grow to be important to figuring out the outlook for inflation, the European Central Financial institution has stepped up its efforts to amass knowledge that’s usually revealed solely with a very long time lag and little element. This yr, the central financial institution began monitoring the quarterly calls when firm executives focus on monetary outcomes with analysts as a part of the policy-setting course of, Mr. Lane mentioned.

Headline charges of inflation within the eurozone have dropped significantly from their peak final yr, and knowledge on Thursday confirmed that Spain’s inflation fee fell under 2 p.c in June. However different measures of home value pressures are nonetheless fairly sturdy. Inflation knowledge for the entire eurozone for June is ready to be printed on Friday. Economists surveyed by Bloomberg count on the headline fee to say no to five.6 p.c, from 6.1 p.c in Might, whereas core inflation, which excludes vitality and meals costs, is predicted to rise to five.5 p.c from 5.3 p.c.

Additional forward, the central financial institution forecasts the headline fee of inflation to be round 3 p.c subsequent yr. However there’s a danger that the “final kilometer” in attending to the goal proves more durable than anticipated, Mr. Lane mentioned, a priority echoed by the Financial institution for Worldwide Settlements, which acts as a financial institution for central banks.

“We do have a 2 p.c goal — we don’t have a 3 p.c goal,” Mr. Lane mentioned. “There’s nonetheless going to be lots to do to go from 3 to 2 p.c.”

Past July, when the central financial institution is predicted to lift charges, Mr. Lane mentioned it was finest to have “no alerts” about what policymakers would do subsequent, due to all of the uncertainty concerning the path of inflation, however he anticipated rates of interest to limit financial development for “fairly a while.”

Another members of the financial institution’s Governing Council, nonetheless, have instructed that rates of interest might want to rise once more in September. And the financial institution’s president, Christine Lagarde, pushed again this week towards buyers’ expectations that rates of interest can be reduce subsequent yr, saying financial coverage must be “restrictive” and keep there “for so long as essential.”