In its latest forecast the Federal Planning Office expects inflation to rise further. This is triggering speculation that the 2% index threshold will be exceeded twice next year, leading to two top-ups to wages and benefits.
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More wage top-ups on the cards sooner as inflation gathers pace
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The Federal Planning Office has again revised its inflation forecasts in an upwards direction. Furthermore, the price index that is used to trigger increases in public sector wages and benefits, the health index, is expected to rise more than 2% earlier next year.
The Planning Office, the federal body responsible for forecasting the economic situation in our country, updates its inflation forecasts every month.
In this month’s forecast, the Planning Office expects inflation – the rise in the cost of living – to rise even further.
The Planning Office expects average inflation of 3.7 per cent this year. Last week, it emerged that inflation had risen to 5.26 per cent in October.
Next year, average inflation is expected to rise further to 4.4 per cent. A month ago, the Planning Office was still forecasting inflation of 3.7 per cent both this year and next.
The health index – the figure used to calculate increases to benefits, civil servants’ salaries and some private sector wages – is set to trigger top-ups in November this year and again as early as February 2027. Previously, the projections were for November 2026 and April 2027.
The Planning Office now even expects a third top-up to be triggered in December 2027. This means that benefits and public sector wages will rise sooner than anticipated and that will place additional pressure on the budget.