FRANKFURT, July 20 (Reuters) - Euro zone firms expect selling prices to rise more moderately and see a slowdown in wage growth, an ECB survey showed on Monday, adding to evidence that a recent energy-driven inflation surge has yet to generate second-round price impacts.
Inflation is hovering near 3% on high energy costs, well above the ECB's 2% target, and policymakers are worried that this level of price increases will start to raise inflation expectations and generate undue wage demands, setting
off a hard-to-break price spiral.
"On average, firms expected selling prices, non-labour input costs and wage expectations to rise more moderately over the next 12 months," the ECB said in its Survey on the Access to Finance of Enterprises.
The more than 5,000 firms participating in the survey now expect selling prices to increase by 3.2% in the next year, down from 3.5% three months earlier, while non-labour input costs, including energy, were projected to rise by 5.2%, down from
5.8%.
Wage growth expectations meanwhile eased to 2.5% from 2.8% in the previous quarter, the ECB said in its survey, which will be a key piece of data for policymakers in their rate-setting meeting on Thursday.
Firms' inflation expectations meanwhile stayed broadly unchanged.
Expectations for one and three years ahead were steady at 3.0%, while the five-year expectation rose to 3.1% from 3.0% three months earlier.
The ECB is expected to keep rates unchanged this week but high oil prices are fuelling bets for another hike in the 2.25% deposit rate in September.
(Reporting by Balazs Koranyi; Editing by Aidan Lewis)
