Basic pay in Britain rose by 3.2%, the fastest in a decade, but the unemployment rate has risen too
Wages climbed at the fastest pace in more than nine years because the 4pc unemployment rate is pushing employers to pay more to attract and retain the workers they need, the latest figures suggest.
Regular weekly earnings rose by 3.1pc in the 12 months to August, the strongest in Office for National Statistics records since January 2009.
Private and public workers are benefitting. Private sector workers’ regular pay climbed 3.1pc, its strongest since 2015, while in the public sector the rate accelerated to 2.7pc, representing the biggest pay rise since 2012.
Since the Bank looks at wage growth as a key driver of inflation, the rosier picture for wages may prompt an interest rate rise from the Bank of England. However, Andrew Wishart, UK economist at Capital Markets, said:
“We still think that the MPC will hold off raising interest rates again until the near-term uncertainty due to the Brexit negotiations is resolved.”
The main issue that UK is held, is that if wages grow without corresponding productivity growth – as we’ve seen in the UK – it means more money chasing the same quantity of goods and services, which pushes up prices.