UK wages rose at one the fastest paces ever recorded and piled pressure on the Bank of England to continue to tighten monetary policy with further interest rate hikes.
UK wages rose 6.4% in November, the highest on record apart from during the pandemic when the unconventional nature of the economy and government support saw dramatic swings in wages.
“UK wage growth picked up more than expected in November, rising to 6.4% from 6.1%, and is running at the highest level since records began in 2001, excluding the distortions during the pandemic,” said Rupert Thompson, Chief Economist at Kingswood.
Although wages grew at near record levels, wage growth still lagged behind inflation, meaning households’ spending power was still falling in real terms.
Nonetheless, the jump in wages will put pressure on the Bank of England to continue with another rate hike to help cool soaring prices. If the Bank of England hike at their next meeting, it will be the 10th rate hike in a row.
“Wage growth might not be keeping up with inflation, but it will give UK central bankers cause for concern as it tries to tame inflation and prevent it from becoming embedded in the fabric of our lives,” said Danni Hewson, AJ Bell financial analyst.
The pound rose against the dollar as traders bet on additional rate increases next month. GBP/USD was trading at 1.2212 at the time of writing.