“Robust” growth in nominal wages is consistent with disinflation in the eurozone and US, provided firms curb their profit margins, research published by the Bank for International Settlements finds.

Authors Benoit Mojon, Gabriela Nodari and Stefano Siviero explore the disinflation process via the GDP deflator, which is calculated as the mark-up set by firms multiplied by unit labour costs (ULC). In turn, ULC is given by wages divided by productivity, so the path of all these indicators matters