Hungary's overall gross average wage growth slowed to an annual 16.7% in November from 18.1% in October, but wage growth in the private sector still accelerated which signals the labour market remains tight even as the economy slows.
After sharp rate hikes to curb inflation, central banks in Central Europe have finished or are seeking to end policy tightening, growing wary of damaging economies too much even as inflation has yet to peak in some countries, like Hungary, where annual inflation was running at 24.5% in December.
The National Bank of Hungary kept its base rate on hold at 13% and pledged a "patient approach" to policy on Tuesday, saying it would keep its one-day deposit rate at 18%. It said factors playing into a turnaround in inflation are expected to strengthen in coming months but the labour market "continues to be tight, and the unemployment rate is low."
In Hungary, private sector wage growth still accelerated to 18.7% year-on-year from 18.2% in October, and 16.8% in September. The government had agreed with employers on a 16% rise in the minimum wage for 2023, which influences wage decisions as the year starts.
"In order to keep the workforce and attract new employees, and taking into account the inflationary environment, employers are forced to implement sizeable pay hikes," Magyar Bankholding analysts said in a note.
"Our expectation is that wage growth for the whole of 2022 probably exceeded 17.5% while this year's wage growth would reach 15%...but in case there are interim wage hikes like last year, this could be even higher."
The Central Statistics Office (KSH) said on Wednesday that wage growth in November 2022 was fuelled by a rise of the minimum wage last year as well as previously scheduled wage hikes and supplementary increases.
Data last week showed that Polish corporate sector wages PLWAGE=ECI rose less than expected in December, maintaining double-digit gains but showing the second slowest growth rate in 2022, taking some pressure off of the central bank. (Reporting by Krisztina Than)