UK wages rise in real terms for first time in a year
New figures show wages rose by 2.8% in February, when inflation was 2.7%
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The rate at which people’s wages are increasing is faster than the rise in the cost of the goods and services they can spend their earnings on, new figures show.
The Office for National Statistics (ONS) says wages rose by 2.8% in February, while inflation was 2.7%. It was the first time since January 2017 that wage growth had outstripped inflation.
Real terms wage growth is good news for the economy – it will “revive hopes for the high street”, says Sky News. Retailers have been struggling since the 2016 Brexit vote pushed the value of the pound down, and the cost of living rose.
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The Bank of England will be looking closely at the news, says The Times, because wage growth is key to the amount of consumer spending, which is “one of the key drivers of growth” and is “dependent on household finances”.
The Bank is widely expected to lift the interest rate to 0.75% next month – and the new figures will add weight to that suspicion, says Sky.
Think tank the Resolution Foundation warned that there is still a “lot of ground to make up”, and noted that despite the increase, average earnings are still £800 a year lower in real terms than they were ten years ago before the global financial crisis.
The Times warns that economists expressed “some concern that wages had not grown as fast as expected” – there had been predictions of a 3% increase.
The ONS also announced that the rate of unemployment has fallen to a 43-year low of 4.2%, with 16,000 fewer people jobless. There was a record high employment rate of 75.4%, with 55,000 more people in work – a total of 32.36 million employed.
The number of unfilled jobs remained roughly the same, compared to the previous month, at 815,000, suggesting that unemployment will fall further.
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