Record-breaking wage growth in the UK
New data from the Office for National Statistics (ONS) shows that wages are continuing to rise for millions of workers across the UK. In fact, pay is growing at its fastest rate on record. The figures reveal that regular pay excluding bonuses stood at 7.8% in May to July this year, the same as the previous three-month period. This is the highest annual growth rate since comparable records began in 2001.
Strong growth in total pay
The ONS figures also show that growth in employees' average total pay, which includes bonuses, was 8.5%. This is the largest annual growth rate seen outside the coronavirus pandemic period. Last month, the ONS announced that for the months of April to June, total pay including bonuses was up 8.2%.
Real wages rise
Taking into account inflation, which currently stands at 6.8%, total real pay rose by 1.2% on the year. Regular real pay rose by 0.6% on the year. This means that people's real pay is no longer falling, thanks to higher earnings and lower inflation.
Impact on household budgets and inflation
Rising wages have been blamed for keeping inflation stubbornly high, which has led to base rate hikes by the Bank of England (BoE) and increased borrowing costs for households. However, the latest wage figures suggest that this pressure on household budgets could ease. On the other hand, high wages could prompt the BoE to further hike rates in an effort to bring inflation back down to its 2% target.
State pensions and the triple lock
The figures released today could impact how much state pensions will increase by in April next year. The triple lock means that the state pension rises in line with whatever is highest out of: wages, 2.5%, or September's inflation figures. As inflation currently sits at 6.8%, the September figure will play a crucial role in determining the state pension increase.
Rising fuel prices and inflation
Rising fuel prices in August are expected to cause a blip in the latest inflation numbers. Chancellor Jeremy Hunt and BoE governor Andrew Bailey have both commented on this. The latest inflation figures for August will be announced next week.
Unemployment and the economy
The rate of UK unemployment rose to 4.3% in the three months to July, up from 4.2% in the previous three months. The number of vacancies also decreased during this time period. Chancellor of the Exchequer Jeremy Hunt highlighted the importance of sustainable wage growth and sticking to the plan to reduce inflation.
Did you miss our previous article…
https://hellofaread.com/money/shoppers-furious-as-pot-noodle-prices-soar/
