Eurozone wage growth is set to slow this year despite a pickup in inflation that has accompanied the conflict in the Middle East, according to new European Central Bank figures.

A tracker of pay deals negotiated by labor unions and similar groups of workers up until the first week of July indicates that wages are set to rise by 2.6% this year, having increased by 3% in 2025. The 2026 figure is unchanged from earlier estimates.

The figures, released Wednesday, point to a slight pickup in the first quarter of next year to 2.7%, an outcome the ECB described as "stable."

ECB officials have highlighted the outcome of wage negotiations as a key indicator of whether the jump in energy prices is set to trigger a sustained rise in inflation above their 2% target.

However, they have yet to see signs that a pickup in wages will lead to a second round of price rises as businesses seek to preserve their profit margins.

"None of those elements, for the moment, are giving us second-round effects indications," ECB President Christine Lagarde said last week, referring to a range of data series that measure wages.

Despite the absence of signs that wage growth is accelerating, investors expect the ECB to raise its key interest rate for a second time since the conflict began when policymakers next meet in September.

European wage negotiations tend to come at the start of the calendar year. ECB officials worry that by the time the hard evidence arrives on whether or not second-round effects are in train, it will be too late to tame inflation.

The eurozone's annual rate of inflation stood at 2.8% in June, above the pre-war level of 1.9%, although down from May's recent high of 3.2%.

That pickup over the first four months of the war between the U.S. and Iran was almost entirely due to higher energy prices, driven by the closure of the Strait of Hormuz to tanker traffic.

Despite that pickup, economists at the ECB last week forecast a slowdown in wages this year, citing "weak near-term growth momentum, low confidence and high uncertainty."

They expect a wider measure of wage growth known as compensation per employee to grow by 3.2% in 2026, down from 3.9% in 2025. With inflation for this year forecast to average 3%, that points to a slight increase in real wages during the year.