Huddled in a retreat in a remote Arctic village, European Central Bank policymakers faced up last week to some cold hard facts: companies are profiting from high inflation while workers and consumers foot the bill
"You see a very clear reluctance to discuss profit," Daniela Gabor, a professor of economics and macro-finance at the University of West England in Bristol. "That illustrates that the distributional politics of inflation targeting is: You don't go for profits; you don't go for capital."
With those savings now being depleted and competition returning, things may be changing for ECB policymakers who have been calling for a redrafting of the inflation narrative. Wages are accelerating, with the ECB's forward-looking wage tracker anticipating a rise of nearly 5% in 2023 for contracts signed in the last quarter of 2022. But that won't offset the massive drop in real wages over the past year, analysts said.
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