ECB survey sees moderating wage demands, selling price growth

FRANKFURT, July 20 (Reuters) - Euro ‌zone firms ​expect ​selling prices to rise more moderately and see a slowdown in wage growth, an ECB survey showed ‌on Monday, adding to evidence that a recent energy-driven ⁠inflation surge has yet to generate second-round price impacts.

Inflation is hovering near ‌3% on high energy ‌costs, well above the ECB's 2% target, and policymakers are worried that this level of price increases will start to ​raise inflation expectations and generate undue wage demands, setting off a hard-to-break price spiral.

"On average, firms expected selling prices, ⁠non-labour input costs and wage expectations to rise more moderately over the next ​12 months," the ECB said in its Survey on the Access to Finance of Enterprises.

The more than ​5,000 firms participating in the survey ‌now expect selling prices to increase by 3.2% in the next year, down from 3.5% three months ⁠earlier, while non-labour input costs, including energy, were projected to rise by 5.2%, down from

5.8%.

Wage growth expectations meanwhile eased to 2.5% from ⁠2.8% in the previous quarter, the ECB said in its survey, which ​will be a key piece of data for policymakers in their rate-setting meeting on Thursday.

Firms' inflation expectations meanwhile stayed broadly unchanged.

Expectations for one and ‌three years ahead were steady at 3.0%, while the five-year expectation rose to 3.1% from ‌3.0% three months earlier.

The ECB is expected to keep rates unchanged ⁠this week but high ‌oil prices are fuelling ​bets for another hike in the 2.25% deposit rate in September.

(Reporting by Balazs Koranyi; Editing by Aidan ‌Lewis)

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