Wage growth eased again in a boost for the Bank of England’s hopes of vanquishing inflation, new figures from the Office for National Statistics (ONS) show.
In the three months to July, annual wage growth including bonuses slowed to 4.0 per cent. This was down from 4.5 per cent last month and a slightly larger fall than economists had anticipated.
Excluding bonuses, pay growth eased to 5.1 per cent from 5.4 per cent previously, which was in line with expectations.
Strong wage growth has been a concern for policymakers at the Bank of England due to fears that it could keep cost pressures elevated, particularly in the labour-intensive services sector.
Larger pay packets also mean consumers have more disposable income, enabling them to spend more on goods and services.
Unemployment meanwhile dipped to 4.1 per cent, slightly lower than last month’s reading of 4.2 per cent but in line with expectations.
Official measures of unemployment are still subject to unusual levels of uncertainty due to the well-publicised difficulties with the flagship labour force survey.
The Monetary Policy Committee (MPC) will announce its latest decision on interest rates next week, with markets widely expecting the Bank to hold rates.
The Bank cut rates for the first time since the pandemic last month but policymakers have insisted they have to be cautious going forward.
“The second-round inflation effects appear to be smaller than we expected. But it is too early to declare victory,” Andrew Bailey said in a speech at the end of August.
Markets think the Bank is on track to cut interest rates once more before the end of the year.
More to follow