Average wages increased by 7.6% in 3Q07 to CZK 21,470. Real average wages increased by 5.0%. The pace of wages growth was exactly in line with our estimates and probably did not take anybody by surprise. The current growth of wages balances exactly between the maximum support of household consumption and the living standard growth, without increasing unit wages costs with negative impact on competiveness of companies. However, what applies to economy as a whole may not apply to all companies and sectors.
Growth of real wages by 5% indicates continuation of solid pace of consumption growth in 3Q07. Moreover, the consumption is supported by relatively low interest rates, which are kept down by the strong crown. However, wages and consumption growth are not signals for the central bank to review its monetary policy, especially given the threats of inflation pressures coming from other directions.