Europe’s inflation peaked above 11% in 2022, severely eroding purchasing power as consumer prices outpaced wage growth following Russia’s invasion of Ukraine. Current data shows that real wages across the euro area remain below early 2021 levels, with Italy experiencing the most significant gap due to stagnant pay growth. While countries like the Netherlands and Germany have neared a full recovery, through delayed collective bargaining cycles. The emerging conflict with Iran now threatens a second inflationary shock, potentially causing real wages to decline again just as they were nearing a rebound. If energy disruptions persist through the year, the timeline for European workers to regain their pre-pandemic purchasing power could be pushed back as far as 2028.
Date: March 31, 2026. Source: euronews.com