LONDON (Reuters) – In Britain, average weekly earnings, including bonuses, rose 5.4% in the three months to the end of June, data from the Office for National Statistics showed on Tuesday. The increase is in line with economists' forecasts.
The Bank of England cut interest rates to 5.25% on August 1, after nearly a year of keeping interest rates at a 16-year high, as it indicated it would closely monitor wage growth.
The central bank has observed that regular wages will almost double in view of keeping inflation at its 2% target over the medium term. He expects data to be released on Wednesday to show inflation rising above target.
Despite current wage growth, expectations for future increases appear modest. The Chartered Institute of Personnel and Development said Monday that employers forecast a 3% wage increase, marking the lowest expectation in two years. Similarly, a 4.1% pay rise is expected in a Bank of England survey.
Last month, Labour's newly elected Finance Minister Rachel Reeves signed into law a pay rise of at least 5% for millions of public sector workers. The decision, which includes a significant 22% pay rise for junior doctors over the next two years, is part of an effort to resolve a protracted industrial dispute.
The Bank of England has expressed greater concern over wage growth in the private sector, which it believes has a direct impact on inflation. The central bank forecast that private sector wage growth will slow to 5% in the last quarter of 2024 and 3% by the end of 2025.
Reuters contributed to this article.
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