Czech real wage growth slows in second quarter

Czech real wages increased for a second straight quarter in the April-June period, but at a slower pace than the first quarter, as falling inflation has given a lift to households' spending power, statistics office data showed on Tuesday.

The average Czech real monthly wage rose by 3.9 per cent year-on-year in the second quarter, the Czech Statistical Office said, down from a 5.0 per cent rise in the previous quarter and below a Reuters poll forecast of 4.3 per cent.

Nominal wage growth slowed to 6.5 per cent, from 7.2 per cent.

Policymakers around central Europe are counting on rising real wages to spur consumer activity this year and lead economic recovery after the inflation surge of recent years weighed heavily on household budgets.

At the same time, central bankers are watching for signs that increased wage demands will add to end prices and inflationary risks as they remain cautious on cutting interest rates.

Second-quarter real wage growth was below a Czech central bank forecast of 4.6 per cent.

Gross domestic product in the quarter already showed the Czech consumer revival has been slow to unfold, with some analysts pointing to wariness after double-digit inflation in previous years.

The Czech National Bank slowed its policy easing pace last month, cutting the main repo rate by 25 basis points, to bring it to 4.50 per cent, after several 50-bp cuts. Governor Ales Michl has said rates would remain higher than what has been standard during the past decade.

Czech wage growth has been outpaced by peers in central Europe, where others have seen double-digit nominal pay increases.