Spain | Strong wage gains but limited risk of inflationary cycle
With inflation in Spain hitting a 30-year high, fears of an inflationary cycle are rising. However, the transition from the present energy-driven inflation push to a broad rise in consumer prices will likely require a sustained increase in wages. And while we expect wages in 2022 will grow at their fastest pace in a decade, the projected 2.5% advance remains well below the rises seen in the 2000s, the last time Spain experienced sustained above-target inflation, thus limiting the chances of another sustained inflationary cycle.
What you will learn:
- The strong historical correlation between wages and past inflation in Spain means we expect to see salaries rise strongly in 2022.
- Stronger wages, though, will feed into higher core inflation as companies pass along some of their costs, a knock-on effect already incorporated into our forecast.
US: High debt costs suggest an industrial correction
The scale of the increases in debt costs, coupled with the low-yielding environment makes some repricing highly likely for gateway US industrial markets over the coming quarters.Find Out More
High debt costs suggest European office price correction
Our analysis suggests a 10% correction is needed on average for the major office markets in Europe to compensate for the higher cost of debt, with prime yields required to soften by 10bps-75bps to generate a low-risk interest coverage ratio at a reasonable LTV.Find Out More