WAGES are still on the rise for millions of workers across the UK.
Official figures released today by the Office for National Statistics (ONS) have revealed that basic pay is still growing.
Official figures released today by the ONS reveal that basic pay is still growing
Growth in regular pay, excluding bonuses, stood at 6.2% in the three months to December last year.
This was the slowest growth seen since the three months to October 2022.
This is down on the previous quarter when wage growth stood at 6.7% from September to November 2023.
But taking into account inflation, which measures how much prices are rising, total pay increased by 1.8%.
Liz McKeown, director of economic statistics at the ONS, said: “In cash terms, earnings are growing more slowly than in recent months, but in real terms they remain positive, thanks to falling inflation.”
The rate of UK unemployment fell to 3.8% in the three months to December from 3.9% in the previous months, the ONS said.
There were 108,000 working days lost in December 2023 because of strikes across the country.
The health and social work industry showed the most working days lost this month.
A growth in wages is good news for millions of workers who have been battling against high inflation over the past year.
The most recent figures show the annual rate at which prises rise was 4% in the year to December – up by 0.1% from 3.9% in November.
The surprise increase was driven by rising tobacco and booze prices.
The January inflation figures are set to be released tomorrow.
If pay rises by less than inflation it squeezes income, leaving people worse off.
Inflation is a measure of how much goods and services are worth in a given period.
In recent months rising wages have been blamed for keeping inflation stubbornly high over the last year, resulting in base rate hikes by the Bank of England (BoE) which have pushed up borrowing costs for millions of households.
The latest wage figures show some of this pressure on household budgets could ease.
But rising wages could force the BoE to hike rates or keep them the same, as it has opted to do at the past four occasions, as it tries to bring inflation back down to its 2% target.
Chancellor Jeremy Hunt said: “It’s good news that real wages are on the up for the sixth month in a row and unemployment remains low, but the job isn’t done.
“Our tax cuts are part of a plan to get people back to work so we can grow the economy – but we must stick with it.”
What it means for your money
Growth in wages is good news for millions of workers who have been battling against high inflation in recent months.
Alice Haine, personal finance analyst at Bestinvest, said: “Wage growth is important for the interest rate outlook, as cooling data may ease any concerns the Bank of England has of a potential wage-price spiral.
“However, the rate of inflation may rise for the second consecutive month when the annual data for January is released tomorrow.
“This is likely to be a temporary blip caused by the rise in the energy price cap at the start of the year, though it might dash hopes of a BoE rate cut sooner rather than later this year. “
Ofgem’s energy price cap rose from £1,834 to £1,928 on January 1.
It means the average household will now see their annual bill increase by £94.
Ofgem will review its price cap again on January 23 for the period from April 1 to June 30.
While high wage growth can ease the pressure off households it does run the risk of fuelling inflation if businesses pass on that cost to customers by increasing the price of goods and services.
This would add extra pressure to household budgets at a time when energy prices are under threat from geopolitical tensions and rising demand as the colder weather sets in.
Rising wages have previously been blamed for keeping inflation high by Bank of England bosses.
High-street banks use the BoE base rate to work out the interest rates it offers to customers.
A hike means the cost of borrowing, including loans, credit cards and mortgage repayments become more expensive.
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