Real wages have been increasing in recent quarters, recovering after their decline during the period of high inflation in 2022. By the first quarter of 2025 – when deflated by price indices that reflect consumption patterns, such as the Harmonised Index of Consumer Prices and the private consumption deflator – real wages had almost returned to the levels recorded prior to the inflation surge. By contrast, when deflated by price indices that reflect the prices charged by domestic firms (such as the GDP deflator and sectoral value-added deflators), real wages have already surpassed the levels achieved before the high-inflation period. This reflects the fact that in the past few years, the rise in the cost of living has been higher than that in the prices charged domestically by euro area producers.
Nothing contributes so much to the prosperity and happiness of a country as high profits