Economics in a picture
Firms that expect greater rises in sales prices are also those that anticipate higher wage increases
According to the results of the Fast and Exceptional Enterprise Survey (IREE) – May 2022 Edition, the majority of firms (83%) consider that the invasion of Ukraine, the increase in prices of raw materials and intermediate goods and disruptions in global supply chains have a negative impact on their business.
These external shocks have an effect on price formation. Two thirds of responding firms intend to increase their sales prices in 2022, while almost a third expect to keep them unchanged. Overall, the expected increases are significant, exceeding 10% for almost 40% of firms intending to raise prices. Firms expecting the largest price rises are also those anticipating the biggest pay rises. In the group of firms expecting price changes of up to 5% in 2022, a quarter anticipates a wage increase of more than 5%. This proportion rises to 42% for firms that intend to increase prices by more than 20% this year. In addition to higher growth of wage costs, the group of firms that will increase prices this year also includes a greater proportion of firms strongly impacted by the rise in the cost of raw materials (energy and other) and transportation.
For more details see box "Outlook for prices and wages in 2022 – an analysis based on the Fast and Exceptional Enterprise Survey results", of the June 2022 Economic Bulletin (in Portuguese only) and the information note of the IREE results - May 2022 Edition.
Prepared by Ana Sequeira and Cristina Manteu. The analyses, opinions and findings expressed above represent the views of the author and not necessarily those of Banco de Portugal or the Eurosystem.
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