Wages in 1Q reflected cost-cutting effort resulted from declining exports, sales and profits. Wages in real terms almost stagnated and this is likely to be a channel, how the recession can contaminate household consumption.
Low wage-inflation should contribute to the decline in demand-pushed inflationary pressures and help to bring CPI inflation close to zero this summer. Thus, CNB has enough room to alleviate the economy by cutting rates once again. Today’s figures lend support to this view.