FRANKFURT (Reuters) – Weak productivity growth in Europe could have a negative impact on the rate of slowdown of inflation in the euro zone which must converge towards the 2% objective of the European Central Bank (ECB), a warned Isabel Schnabel, member of the institution’s board of governors, on Friday.
“The persistence of low, or even negative, productivity growth exacerbates the effects of the current strong growth in nominal wages on unit labor costs for businesses,” she noted during an event in Florence, Italy.
“This increases the risk that businesses will pass on higher wage costs to consumers, which could delay the return of inflation to our 2% target,” she added.
While awaiting monthly inflation figures for the entire euro zone, expected next week, the rise in consumer prices in France was confirmed on Friday at 3.4% year-on-year in January.
(Reporting Francesco Canepa; French version Claude Chendjou, editing by Zhifan Liu)
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