The latest wage growth data for the three months until the end of August was published this morning. Newspage asked experts how this could impact the next Bank of England interest rate decision.
Annual growth in regular pay (excluding bonuses) was 7.8% in June to August 2023, similar to recent periods and one of the highest regular annual growth rates since comparable records began in 2001.
Annual growth in employees’ average total pay (including bonuses) was 8.1% in June to August 2023; this total growth rate is affected by the NHS and civil service one-off payments made in June, July and August 2023.
Annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay rose on the year by 1.3% in June to August 2023, and for regular pay rose on the year by 1.1%.
Annual average regular pay growth for the public sector was 6.8% in June to August 2023 and is the highest regular annual growth rate since comparable records began in 2001; for the private sector this was 8.0% and among the largest annual growth rates seen outside of the coronavirus (COVID-19) pandemic period.
The finance and business services sector saw the largest annual regular growth rate at 9.6%, followed by the manufacturing sector at 8.0%; this is one of the highest annual regular growth rates for the manufacturing sector since comparable records began in 2001.
Wes Wikes, CEO are Net-Worth NTWRK said, “This consistently sticky wage growth is a headache for the Bank of England, and could be bittersweet for borrowers.
“While it’s good news to see wages growing in real terms, consumers feeling flush, albeit in relative terms, has the potential to stoke the fires of inflation once more.
“The worry is that this could cause the Bank of England to consider more needs to be done with regard to tightening monetary policy and see them raise rates further.”
Justin Moy, Managing Deirector at EHF Mortgages said, “This looks to rubber stamp another hold in the base rate decision in a few weeks’ time, unless Middle East tensions drive oil prices significantly higher.
“We need to see if businesses will pass on these higher staff costs to the price of products and services, which could slow the improvements seen in the economy over the last few months.
“We are still way behind the target of 2%, so no base rate cut on the horizon just yet.”