Regular pay grows by 7.8 per cent in three months – sparking ‘migraine’ for central bank
Wage increases in the UK have soared to a new record high – but are still being outpaced by stubbornly persistent inflation, figures show.
The Office for National Statistics said regular pay rose by 7.8 per cent between April and June, almost as high as the 7.9 per cent level of inflation.
The new figures will give Bank of England decision makers a “migraine” as it heaps further pressure on them to keep hiking interest rates to cool inflation, according to experts.
Official statisticians also revealed that the rate of unemployment in the UK increased from 3.9 per cent to 4.2 per cent in the three months to June – while the number of people with long-term sickness has increased to a record high.
It means the unemployment rate is the highest since the autumn of 2021 and brings the measure above pre-pandemic levels. Labour accused the Tories of “failing working people” by having “no answers” to getting people back to work.
It comes ahead of the inflation figures for July, published later this week, with analysts optomistic that the rate will fall by nearly a full percentage point. The data is expected to show consumer prices index (CPI) inflation falling from 7.9 per cent to around 7 per cent.
However, The Independent understands that analysis by Treasury officials shows that inflation will then rebound again in August – with the unwelcome reversal set to show up in figures released the following month.
Wage growth means the Bank of England will face extra pressure to hike interest rates from 5.25 per cent to 5.5 per cent in September, said CMC Markets analyst Michael Hewson. “This morning’s numbers have not just given the central bank a headache, but a migraine,” said the expert.
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