But average wage growth before bonuses was 5.9 per cent in the final three months of 2024, well above the bank’s 2 per cent inflation target, the Office for National Statistics said on Tuesday.
Wage pressure, which was driven by 6.2 per cent growth in the private sector and 4.7 per cent in the public sector, could put the brakes on the BoE’s cuts.
Separate ONS data showed the employment rate rose to 74.9 per cent in the fourth quarter as Britain’s frustratingly high rate of economic inactivity – those out of work but not seeking employment, such as students or those with long term sickness – eased slightly to 21.5 per cent.
But Pugh added that real wage growth of 2.5 per cent, the fastest rate since 2021, ‘should eventually feed through into stronger household consumption’ and help to revitalise lacklustre growth.
The BoE has been expected to ‘gradually’ reduce base rate close to 3.75 per cent by December, indicating three further cuts of 25 basis points each, as economic output stutters and inflation pressures fade.
