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Inflation pushes up the cost per hour worked, which grows at a record rate in 3 years

Date: October 4, 2023 Time: 19:11:11

The inflationary current that has been established in the economy for months is being transferred to labor costs. According to the National Institute of Statistics (INE) in the first quarter, the cost per hour worked increased by 4.6%, in its seventh consecutive quarter of growth. There has not been such a significant increase since 2020, when during this indicator it increased at a rate of more than 8%.

In fact, there are a number of sectors where the rate is advancing at a particularly significant pace. In the first three months of 2023, for example, groups such as the extractive industry or the supply of electricity, gas, steam and air conditioning registered increases that exceeded 9% year-on-year. Only one sector, financial and insurance activities, suffered setbacks in the first quarter of 2023. Specifically, it fell by 5.8%.

The growth rate of the cost per hour worked has been rising in recent quarters. Specifically, the increase registered between January and March is the most significant in sevens, when this indicator began to rebound. The last time a decline started was in the second quarter of 2021.

‘Second Round’ Inflation

Although the general rate of inflation has been easing for a few months, the tension on costs per hour worked could continue in the coming months, taking into account the revision of agreements, which is transferring part of last year’s inflation to wages.

Economists have drawn attention to this effect, known as second-round inflation, which is an incentive for inflation rates to remain above their historical average and complicates the work of the European Central Bank (ECB) when to establish interest rate increases that are balanced.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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