For example, HICP inflation excluding food and energy had been stuck below 1% for around three years, but was 1.1% in September. Nevertheless, underlying inflation pressures are still too weak and have so far failed to show convincing signs of a sustained upward trend. An important element keeping underlying price pressures subdued is muted wage dynamics, which are shaped by many factors.
In addition to weak productivity developments, the significant degree of remaining labour market slack is limiting wage growth. When assessing slack, it can prove useful to also look at broader measures than the unemployment rate.