Pay rises for UK workers remain well above inflation, which could factor into the Bank of England’s decision on when to cut interest rates.
Regular pay, excluding bonuses, increased by an average of 6% in the three months to February 2024 compared with a year earlier, according to the latest data from the Office for National Statistics (ONS). This is down slightly from 6.1% in the three months to January.
Taking inflation into account, pay growth was 1.9% — the highest level since July to September 2021.
As high earnings risk boosting demand, and therefore prices, policy makers would prefer to see a significant easing in the pace of wage growth before reducing interest rates from the current level of 5.25%.
ONS director of economic statistics Liz McKeown said there are “tentative signs that the jobs market is beginning to cool”.
The data showed a drop in the employment rate and an increase in the unemployment rate between December and February, and there was a further rise in the number of people classed as economically inactive — those not in work or looking for a job.
Vacancy numbers also continued to come down, declining by 13,000 on the quarter to 916,000. This was the 21st consecutive period of job vacancies decreasing, but the total was still 120,000 above the pre-pandemic level.
