UK regular pay rises by annual 5.4% in three months to June

BRITISH average weekly earnings, excluding bonuses, were 5.4 per cent higher than a year earlier in the three months to the end of June, the Office for National Statistics said on Tuesday (Aug 13).

Economists polled by Reuters had forecast regular wage growth of 5.4 per cent.

The Bank of England (BOE) said it would continue to keep a close eye on wage growth when it cut interest rates on Aug 1 after keeping them at a 16-year high of 5.25 per cent for nearly a year.

Regular pay has been growing at roughly double the pace the BOE thinks is compatible with keeping inflation at its 2 per cent target over the medium term, and the central bank expects data on Wednesday to show inflation back above target.

However, employers expect lower headline inflation to reduce pressure to raise wages over the coming year. The Chartered Institute of Personnel and Development on Monday said employers expected to raise pay by 3 per cent – the lowest expectation in two years – while a BoE survey pointed to pay rises of 4.1 per cent.

Last month newly elected Labour Party finance minister Rachel Reeves approved pay rises of at least 5 per cent for millions of public sector workers, including a 22 per cent rise for junior doctors over two years to resolve a long-running industrial dispute.

SEE ALSO

UK to see first inflation rise this year, bolstering Bank of England caution

UK homebuilders boosted by rate cut and promise of planning reforms

UK mortgage possessions jump as higher rates squeeze homeowners

The BOE is more focused on growth in private-sector pay, which it says has a more direct impact on inflation, and forecasts this will slow to 5 per cent in the final quarter of this year and 3 per cent in late 2025. REUTERS