EUROPEAN ECONOMIC SURVEY: ECB CTS – Core Disinflation To Remain Sluggish (1/2)

The ECB have published the summary of its latest Corporate Telephone survey, conducted with 95 non-financial companies between Sep 16 and Sep 26. Although “contacts reported a further moderation in price growth overall”, the results suggest core disinflation towards target will continue to be a slow process. The survey was referenced in yesterday’s press conference as one of the datapoints supporting the ECB’s 25bp cut.

• Business and consumer services firms “continued to report climbing prices”, citing rising labour costs and continued growing demand. However, the ECB notes that “overall momentum seemed to have eased in recent months”.
• Wage growth expectations were unchanged, with participants expecting 3.6% wage growth in 2025 (vs 4.4% in 2024). However, very high union wage demands added uncertainty to the wage and employment outlook. These demands “did not reflect the currently challenging economic environment”, according to some firms.
• Retail prices were seen as fairly stable, due to a “competitive environment” and price-sensitive consumers.
• Stable prices were also observed in the industrial sector, with lower intermediate goods prices offsetting increasing capital/consumer goods prices. This reflected “the challenging economic situation, strong competition and largely unchanged prices of energy and raw materials”.
• Although several manufacturing respondents referenced higher shipping costs resulting from Middle East tensions, others noted that freight rates were now falling.