Wages are now growing faster than prices, providing relief for households
UK salaries rise at fastest rate in almost 10 years
UK wages are growing at their fastest pace in almost a decade, suggesting the economy is continuing to operate with little slack.
Average earnings excluding bonuses rose 3.1 per cent in the three months through August, the most since January 2009, the Office for National Statistics said Tuesday. Unemployment held at a 43-year low of 4 per cent.
While wage growth remains below its pre-crisis average, muted productivity means that even a modest pick-up could fuel inflation as companies raise prices to protect their margins.
Bank of England officials raised interest rates in August, although Brexit uncertainty means no further increases are expected before Britain leaves the European Union in March.
The pound held gains after the data, rising 0.4 per cent to $1.3197 as of 9:34am London time.
There were some signs of weakness in the latest snapshot of the labour market, with employment falling for the first time since the autumn of last year. Unemployment declined, but only because of a sharp rise in the number of people counted as inactive, particularly students.
Wages are now growing faster than prices, providing relief for households squeezed by the inflation surge following the 2016 Brexit vote. Overall wage growth picked up to 2.7 per cent, ahead of the 2.5 per cent inflation rate in the period, and the BOE sees a pickup toward 3.5 per cent next year.
Upward pressure on settlements is expected to come from the public sector, where millions of workers will this year benefit from the easing of a cap on pay increases in place since 2010. In the latest three months, regular public-sector pay rose 2.7 per cent, the fastest pace since September 2012.