Record wage growth intensifies pressure for further interest rate hikes

Despite the jump, the real wages of workers are declining due to inflation. their highest pace ever outside of the pandemic, putting pressure on the Bank of England to keep raising interest rates to avoid an inflationary spiral.

Regular wages, excluding bonuses, increased by 7.2% in three month to April, according to the Office for National Statistics.

This figure beat economists' forecasts of 6.9% and is above an upwardly revised 6.8% for the previous three months.

The average regular private sector wage growth was also the largest outside the pandemic, at 7 .6%, while public sector wages increased by 5.6%, the biggest increase from August to October 2003.

The latest numbers will be hard to read. on Threadneedle Street.

Bank of England regulators are expected to raise interest rates for the 13th consecutive week next week, hitting households.

Politicians see rising wages as an indicator of how embedded inflation is becoming in the economy, despite the initial shock of the easing of the energy crisis.

Despite hot wage figures, workers continue to see their real wages worsen. , as high inflation of 8.7 percent nullifies wage growth and hits households.

Real wages, including bonuses, fell by 2 percent compared to 3 percent in January-March.

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There were some signs of easing in the UK's labor supply problems in the latest data from the Office for National Statistics, which is likely to be welcomed by policy makers.

Employment reached a record high in the last quarter, although relative to population, this figure remains below pre-crisis levels.

This was due to economic inactivity, that is, the proportion of people neither in work nor in search of work — decreased by 0.4 percentage points in the quarter to 21% in February-April.

The decrease was caused by people who were classified as inactive for «other reasons» and those who cared for them. family or home.

This suggests that the cost of living crisis is forcing people to return to work. However, the number of people who were left without work because they were classified as long-term ill again broke another record, well over 2.5 million people.

Despite skyrocketing wages, there are also emerging signs of a gradual decline in childbirth. market slowdown: Jobs fell by 79,000 in the quarter.

This is the 11th consecutive drop as companies say economic pressures are hitting recruiting.

257,000 people were employed. days lost due to labor disputes in April 2023