Wage growth starts to outpace rate of inflation

Pay growth has caught up with the rate of inflation for the first time in nearly two years, as wages surged at a record rate in the last quarter, official figures have shown. According to the Office for National Statistics (ONS), earnings, excluding bonuses, rose by 7.8% between May and July against the prior year, matching inflation for the first time since October 2021. This rise was the same as the previous three-month period and marks the highest regular annual growth rate since comparable records began in 2001. However, the ONS found that the unemployment rate for May to July rose by 0.5% to 4.3%, with the rise largely driven by people unemployed for up to 12 months. In total, the UK employment rate was estimated at 75.5% in the period, 0.5% lower than February to April 2023 with the quarterly decrease mainly driven by full-time self-employed workers. In addition, job vacancies fell on the quarter for the 14th consecutive period, falling below the million mark for the first time since the summer of 2021. Commenting on today’s figures, ONS director of economic statistics Darren Morgan 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. “Unemployment continues to increase in the latest three months. Correspondingly, employment is down, driven by falls among men and the self-employed. The proportion of people neither working or looking for a job is slightly up, with more students, as well as the long-term sick reaching yet another record.” He added: “Meanwhile, working days lost to strikes jumped in July, especially in education, with the health sector also still heavily affected. However, the overall number is still below what it was a few months ago. “Job vacancies have fallen below the million mark for the first time since the summer of 2021, when the reopening of the economy created huge demand for workers. However, they still remain significantly above pre-Covid levels.”