The Office for National Statistics (ONS) reported that regular wages increased by a near-record 7.8% in the three months from June to August. With Consumer Price Index (CPI) inflation factored in, there was a 0.7% increase.
According to revised ONS data, yearly increase in regular pay excluding bonuses outpaced CPI inflation by 0.1% in the prior three months to July. They initially predicted flat real profits growth.
It meant that earnings were now increasing faster than prices for the first time since October 2021. Chancellor of the Exchequer Jeremy Hunt stated, “It’s good news that inflation is falling and real wages are rising, so people have more money in their pockets.”
“In order to maintain this progress, we must stick to our plans.”
It will come as a relief to workers who have seen their pay packets eroded by sky high inflation for nearly two years. Wages are now surging by record levels seen outside of the pandemic-skewed era, with regular pay jumping by an upwardly revised high of 7.9% in the three months to July.
According to the ONS, inflation is also easing back, falling to 6.7% in August, having reached a 41-year high of 11.1% last October. The official figures on Wednesday expected to show another decline to 6.6%.
The latest data shows that total wages including bonuses jumped by 8.1 per cent in the three months to August, although this was affected by NHS and civil service one-off payments. Real total wages were 0.8 per cent higher with CPI inflation taken into account.
The ONS added that public sector pay leaped 6.8% higher in the three months to August. One of the highest growth rates since records began in 2001 although it continued to lag behind the private sector, at 8%.
But, there was more mixed news on the wider employment sector, with provisional real-time figures estimating that UK workers on payrolls fell by 11,000 month-on-month to 30.1 million in September.
The ONS also revised down its estimate for the previous month, to a fall of 8,000 payroll workers in August compared with July against the 1,000 decrease initially reported. Vacancies also dropped to 988,000 in the three months to September, down by 43,000 on the previous quarter and marking the 15th drop in a row.
Compared with a year earlier, vacancies were 256,000 lower between July and September. The ONS has delayed the publication of the more comprehensive Labour Force Survey data revealing the employment and unemployment rate for the three months to August until October 24.
This is due to concerns about the decline in the response rate for the survey. The Unite trade union said the
A boost in real earnings would be a “small respite” for many. “The real value of wages has been eroded over more than a decade,” claimed Unite national secretary Sharon Graham.
“Data suggesting pay rises have finally caught up with corrosive inflation will give hard-working families some small respite from the damage that has been wrought on household incomes by years of economic incompetence and mismanagement.”
According to Pantheon Macroeconomics’ Samuel Tombs, the minor slowing in wage growth should allow the Bank of England to hold off on any rate hikes.
“Signs that wage growth is losing momentum should persuade the MPC to keep Bank Rate at 5.25% again next month,” he added. He also stated that the Bank was likely to keep rates unchanged. at 5.25% until next spring, “and then to about 4.5% by the end of 2024”
