Are Wages the (New) Price Drivers?

Collective wage increases recently accelerated to 8 percent year-on-year. So far, however, they have not caused any additional price increases, but rather resulted from them, as this analysis shows. While compensation for real wage losses will thus not trigger a "wage-price spiral", it will reinforce the deterioration in price competitiveness resulting from overinflation in Austria. Moreover, it will come at the expense of companies, as the capital outflow to commodity-exporting countries has reduced the margin for distribution.