Wages Rising Faster than Expected after a Year of Slowing

By Evans Momodu
3 minute read

New data from the Office for National Statistics (ONS) reveals that average wages in the UK grew by 5.2% in the three months to October, marking a sharp uptick after over a year of slowing wage growth.

This surge surpassed expectations, with economists polled by Reuters forecasting increases of 4.6% including bonuses and 5% excluding bonuses.

Breakdown of the Data

• Private Sector: Wage growth stood at 5.4%, outpacing the 4.3% seen in the public sector.
• Unemployment: Remained steady at 4.3%, aligning with predictions.
• Payrolls: The number of people on UK payrolls declined by 35,000 to 30.4 million between October and November, though this is subject to revisions.

For workers, the wage increase is a positive development amid rising costs of living.
However, it could spell challenges for mortgage holders and those seeking new loans, as wage growth contributes to inflationary pressures that may affect interest rates.

Inflation and Interest Rates

The Bank of England has been closely monitoring wage trends as part of its strategy to manage inflation, which climbed to 2.3% in October.

Economist Gora Suri from PwC UK remarked:

“Despite the considerable disinflation we have seen in the UK economy over the last two years, these underlying inflationary pressures remain.”

The central bank is expected to keep interest rates on hold at its next meeting, with rate cuts likely to resume in early 2025. The high wages are likely to influence the Bank’s longer-term policy decisions.
Source: Sky news