Good news for some, not so good for others. The latest figures from the Office for National Statistics show wages rocketed to 7.8 per cent between April and June, the fastest annual rate since records began over two decades ago.
According to the ONS, workers in the private sector received pay rises averaging 8.2 per cent when excluding bonuses – setting another record outside of the pandemic when big pay rises were common to attract more staff. Public sector workers were given a 6.2 per cent boost, the highest since 2001. The highest pay awards were in the financial services sector, at 9.4 per cent.
ONS director of Economic Statistics Darren Morgan said: “Coupled with lower inflation, this means the position on people’s real pay is recovering and now looks a bit better than a few months back.”
The faster than expected wage growth suggests the Bank of England’s Monetary Policy Committee will not hesitate to hike interest rates again when it meets next on September 21. Traders are now betting on a rise to 5.5 per cent and then another 25 bp lift before Christmas.
Some economists are now predicting base rates of 6 per cent by next March.
On the labour front, the number of job vacancies fell by 66,000 between May and July, with unemployment up from 4 per cent to 4.2 per cent. However, the labour market is still tight with more than one million vacancies overall.
All eyes now are on tomorrow’s inflation figures for July which are expected to show a fall to below 7 per cent for the first time since Russia invaded Ukraine. And the outlook is brighter on the food front: Kantar reports today that supermarket inflation has slowed for the fifth month in a row. Grocery price inflation fell to 12.7 per cent in the four weeks to August 6, down 2.2 percentage points from a month earlier. This was the second sharpest monthly drop since 2008, with prices falling particularly dramatically for milk, pasta, bread and cooking oils reflecting the downturn in global commodity prices. At last, inflation is going in the right direction.
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