UK wage growth accelerated in the three months to April against a backdrop of rising employment, underlining the strength of the jobs market but also the Bank of England’s challenge in reducing inflation.
The Office for National Statistics said average private sector wages, excluding bonuses, were 7.6 per cent higher than a year earlier in the first quarter, the fastest pace of growth on record outside the coronavirus period. Average public sector wages were 5.6 per cent higher.
Across all employees, annual growth in total pay, including bonuses, picked up pace to 6.5 per cent, faster than analysts had expected.
Although pay is still not rising fast enough to match the rate of increase in households’ living costs, economists said wage growth was well above levels consistent with the Bank of England’s 2 per cent inflation target, underlining the case for the central bank to continue raising interest rates.
“If there was still any doubt about the direction of monetary policy, these data should solidify another interest rate increase from the bank of England next week and probably more in the coming months,” said Yael Selfin, chief economist at KPMG.
