Wage growth accelerated again in the final quarter of last year, new figures show, in a reminder that the UK economy still faces sticky price pressures.
According to figures released by the Office for National Statistics (ONS), annual regular pay growth averaged 5.9 per cent in the final three months of last year, up from 5.6 per cent previously.
Total pay growth – which includes bonuses – hit 6.0 per cent in the same period, also up from 5.6 per cent.
“Growth in pay, excluding bonuses, rose for a third consecutive time, with increases in both the private and public sector,” Liz McKeown, director of economic statistics at the ONS said.
Unemployment, meanwhile, remained steady at 4.4 per cent. Economists had expected to see a slight increase to 4.5 per cent.
While the figures were roughly in line with City forecasts, the acceleration in pay growth suggests that inflationary pressures remain elevated and may prevent the Bank of England from cutting interest rates aggressively.
The Bank cut interest rates earlier this month, but many members of the Monetary Policy Committee have warned against rapidly reducing rates given lingering price pressures.
“We’re not in a situation where we can declare job done,” Huw Pill, the Bank’s chief economist, said, citing the “surprising” surge in wage growth.
But policymakers expect wage growth to fall as slack continues to build in the labour market.
A survey published earlier this week also showed that a quarter of firms were planning to make redundancies in the next quarter, the highest proportion in ten years, excluding the pandemic.
The Bank forecasts that annual wage growth will fall to 3.7 per cent across 2025, as more people go for fewer jobs.
More to follow