Bank set to hold rates as wage growth rises for first time in more than a year
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Wage growth has jumped higher for the first time in more than a year, reinforcing expectations that the Bank of England will hold interest rates later this week. Official figures showed regular earnings growth rose by more than expected, to 5.2% in the three months to October, up from a revised 4.9% in the previous three months and the first time it has risen since August last year.
Earnings growth also outstripped inflation by 3% in the three months to October, with Consumer Prices Index (CPI) inflation taken into account, according to the data from the Office for National Statistics (ONS). ONS director of economic statistics Liz McKeown said the rise in wage growth was driven by the private sector, where regular earnings lifted by 5.4% in the three months to October, which is the highest since May.
Public sector pay growth stood at 4.3% in the latest period. Pay growth is watched closely by rate-setters at the Bank for signs of inflation pressures in the economy. Experts said the pick-up in wage growth cements expectations that policymakers will keep the base rate on hold at 4.75% when they next decide on Thursday, having already cut rates twice this year as inflation has eased back.
Gora Suri, economist at PwC UK, said the rise in earnings growth shows that inflation pressures remain in the economy. He said: “Despite the considerable disinflation we have seen in the UK economy over the last two years, these underlying inflationary pressures remain.
