Data from the Office for National Statistics (ONS) shows that wages, excluding the effects of bonuses, were up 7.8 per cent compared to the same month a year ago.
It means that salaries appear to be outpacing the rate of price growth in the economy for the first time in over a year. The increase of 7.8 per cent is also the joint-biggest increase on record.
New figures also show the UK’s unemployment rate rose to 4.3 per cent in the three months to July, up from 4.2 per cent in the previous three months.
Responding to the news, chancellor Jeremy Hunt said in a statement: “It’s heartening to see the number of employees on payroll is still close to record highs and that our unemployment rate remains below many of our international peers.
“Wage growth remains high, partly reflecting one-off payments to public sector workers, but for real wages to grow sustainably we must stick to our plan to halve inflation.”
Michelle Donelan, the science and technology secretary, told Sky News this morning that these are “good statistics in terms of our growth agenda”.
In the public sector, total pay soared 12.2 per cent as new pay deals kicked in.
Overall, it means earnings are rising faster than prices, as annual inflation slowed to 6.8 per cent in July.
Darren Morgan at the ONS said: “Earnings in cash terms continue to increase, at a record rate outside the pandemic-affected period. Coupled with lower inflation, this means people’s real pay is no longer falling.”
Some economists fear the new figures will worry the Bank of England where officials fear higher pay risks keeping inflation rising.
Ashley Webb at Capital Economics said: “The further rise in wage growth will only add to the Bank of England’s unease and supports our view that the Bank will raise interest rates once more, from 5.25 per cent currently to a peak of 5.50 per cent, next week.”
TUC General Secretary Paul Nowak said: “Today’s pay and jobs figures show the UK economy is in the danger zone. Unemployment is up by nearly a quarter of a million over the last year.
“And while average pay has finally inched above inflation, real wages still falling across the public sector, retail, hospitality and construction. If pay packets had been growing at pre-crisis levels, workers would be on average £14,700 better off. …
“The Tories’ lack of a credible economic plan is costing the country dear.”
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