Home Business News UK wage growth falls to the lowest rate in 10 months

UK wage growth falls to the lowest rate in 10 months

by Thea Coates Finance Reporter
16th Jan 24 10:26 am

Wage growth across the UK has fallen to the lowest rate in 10 months, which is raising hopes that the Bank of England could lower interest rates.

Official data shows that for the fifth month in a row earnings have now outstripped price rises.

In the three months to November average earnings, except bonuses increased by 6.6%, this is down from the revised 7.2% compared to the previous three months, according to the Office for National Statistics (ONS) said.

Craig Erlam, senior market analyst for Oanda, said that inflation has fallen faster than expected and with wage growth slowing sharply, “there is every chance we see much more over the coming months that enables the Bank of England to pivot towards cutting interest rates.”

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“It is probably a little early to expect too big a pivot but it could lay the groundwork for a May cut as long as the data continues to comply,” he added.

James Smith, developed markets economist for ING, said “the bottom line is that both wage growth and services inflation, the datasets that are guiding monetary policy right now, are below Bank of England projections”.

The Chancellor Jeremy Hunt said, “It has been tough for many families recently, but with inflation now falling and the economy gradually returning to growth, today’s continuing rise in real wages will offer further relief.

“On top of this the cut in national insurance contributions will get more people back into the jobs market, not just supporting economic growth but saving a typical two-earner household around £1,000 this year.”

Liz McKeown, the ONS’s director of economic statistics, said: “The overall picture continues to be broadly stable, with the unemployment rate unchanged and the employment rate up slightly on the previous three months.

“While annual pay growth remains high in cash terms, we continue to see signs that wage pressures might be easing overall.”

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