UK wage growth fuels inflation concerns

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UK wages grew much more than expected in the three months to June, according to official figures that are likely to reinforce policymakers’ concerns over the pressures fuelling inflation. 

In April to June, annual growth in regular pay, which excludes bonuses, was 7.8 per cent, the highest regular annual growth rate since comparable records began in 2001, according to data published on Tuesday by the Office for National Statistics.

The annual growth in employees’ average total pay, which includes bonuses, was 8.2 per cent in the three months to June.

Economists polled by Reuters had forecast total and regular pay to have increased 7.3 per cent 7.4 per cent respectively. 

Annual average regular pay growth for the private sector was 8.2 per cent in April to June, the largest annual growth rate seen outside of the coronavirus pandemic period.

In June, wage growth was in part supported by the new NHS pay deal, which included a one-off bonus and a 5 per cent pay rise for more than a million health staff.

ONS data also showed that the labour market continued to loosen. The unemployment rate for April to June 2023 increased 0.3 percentage points in the quarter to 4.2 per cent. In May to July 2023, the estimated number of vacancies fell 66,000 on the quarter to 1,020,000.