Core inflation, which excludes energy and unprocessed food prices, by contrast, has been rising but remains subdued, reflecting the impact of a prolonged period of low inflation, weak wage growth as well as remaining labour market slack.

In particular, monetary policy needs to avoid that temporary increases in inflation lead to the emergence of second-round effects in the wage and price-setting behaviour, for instance due to the indexation of wages and prices to past inflation, or more generally to a worsening of inflation expectations.

17. Considers that depressing wages and forcing Europe's workers to undercut each others salaries will trigger deflation, reduce purchasing power and internal demand and increase the risk that the economy will fall back into recession; insists on the need to establish effective wage floors at the bottom of the labour markets (minimum wages, additionally the concept of a living wage) and also at the top (maximum wage ceilings of e.g. 20 times the average wage), the implementation of the principle of equal treatment and equal pay for equal work or work of equal value at the same workplace and allowing for upward wage developments com ...[+++]pensating inflation, productivity increases and a strong re-distribution component;

For the euro area as a whole, there are currently no signs of a pick-up in wage inflation but actual wage inflation is showing a downward trend since the beginning of the year.

What we are saying is that wages should not automatically rise with inflation but that wage trends must take account of productivity gains, which can be achieved in the economy, and wages can also be raised accordingly without inflation.

The biggest threat to Ireland at the moment is wage inflation fuelled by 75,000 job vacancies.