Basic Wages in Britain hit new record growth

Basic wages in Britain has hit a new record growth rate, according to figures showed on Tuesday, adding to worries for the Bank of England (BoE) about long-term inflation pressures.

This comes after 14 back-to-back increases in interest rates.

Official data showed some fresh signs of cooling in the jobs market with the unemployment rate unexpectedly rising to 4.2% from 4.0%, the highest since the three months to October 2021 and climbing more quickly than the BoE has forecast.

But the 7.8% increase in basic earnings – the strongest in records data back to 2001 – represented further impetus for Britain’s high rate of inflation with many employers resorting to increased pay offers to retain or attract staff.

Annual pay growth including bonuses also accelerated, hitting 8.2%, the fastest outside the coronavirus pandemic period when government job subsidies distorted the data.

Meanwhile, the Pound Sterling rose against the dollar and euro after Tuesday’s data, while two-year British government bond yields, which are sensitive to speculation about BoE rate changes, hit their highest level in a month.

Pay growth looks set to overtake the rate of consumer price inflation which is forecast to have slowed to 6.8% in July in data due to be released by the ONS on Wednesday.

Reuters/Hauwa Abu