Real wages in several developed countries have started to fall against the backdrop of an energy crisis caused by the conflict over Iran and disruptions to shipping through the Strait of Hormuz, the Financial Times (FT) reported.
Inflation in the United States accelerated to 3.8% year-on-year in April, while average hourly earnings increased by 3.6%. This means that price growth has exceeded wage growth for the first time in 2 years. A similar situation is developing in the UK, where real wage growth in the first quarter was close to zero. In the eurozone, the energy crisis also threatens the recovery of household incomes after a spike in inflation in 2022.
KPMG’s chief US economist, Diane Swank, told the FT that the Iran conflict is disrupting supply chains and will continue to push up prices even if the Strait of Hormuz opens soon. According to Klaus Wistesen, an analyst at Pantheon Macroeconomics, real wage growth in eurozone countries could approach zero in 2026.