The pace of basic wage growth in the United Kingdom has registered its first decline since January, according to the latest official data, closely monitored by the Bank of England.
Figures released by the Office for National Statistics (ONS) indicate that average basic wages rose by 7.8 percent during the three months ending in August compared to the same period the previous year, slightly down from the revised rate of 7.9 percent recorded in the previous month.
Additionally, separate figures for average weekly earnings, which include bonus payments, showed a significant easing, dropping to 8.1 percent from 8.5 percent.
However, this decrease is believed to be influenced by the public sector awards paid out in June.
Rising wage growth
This new data may offer some relief to policymakers at the Bank of England who have been closely monitoring the rising wage growth, fearing its potential to fuel inflation. As of now, inflation is running at a concerning 6.7 percent.
The central bank’s concern revolves around the notion that increased wage growth could enhance household spending power, thus boosting demand and exerting upward pressure on prices.
Just last month, it was revealed that the rate of pay growth had outpaced inflation for the first time in 18 months. Despite this, the Bank’s monetary policy committee (MPC) refrained from implementing a 15th consecutive interest rate hike, citing other contributing factors.
The slowing wage growth, although seen as a positive development in terms of inflation, leaves the Bank of England with a complex balancing act. Policymakers are now likely to closely observe the economic landscape, weighing the potential consequences of this wage growth slowdown against other prevailing factors to ensure price stability and economic growth.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.