According to official data, wages in Britain increased at a slightly slower rate in the three months leading up to September, following a previous record pace.
Job vacancies fell, signalling a minor step down in the UK jobs market.
In the third quarter, earnings excluding bonuses were 7.7% higher compared to the same period a year earlier, as shown by the data released by the Office for National Statistics (ONS) on Tuesday.
This number reflects a slight decrease in regular pay growth, down from 7.9% in the last two reports by the Office for National Statistics (ONS).
The previous rates were the highest recorded since the start of this data series in 2001.
This information is likely to make the Bank of England vigilant about potential inflation pressures.
Following the release of the ONS figures, the pound slightly strengthened against the U.S. dollar.
The Bank of England (BoE) is closely monitoring pay growth to evaluate the remaining inflation pressure in the UK economy, having increased interest rates 14 times consecutively from December 2021 to August this year. Since then, it has maintained rates at the same level.
When considering bonuses, which can be erratic, pay growth decreased from 8.2% in the three months to August to 7.9%.
The BoE has mentioned that pay growth is declining too slowly for it to contemplate reducing interest rates, although informal estimates of wage increases indicate a less steep rise than the official numbers from the ONS.
According to Danni Hewson, head of financial analysis at AJ Bell, “When adjusted for inflation, it means people are finally feeling the benefit in their pay packets, and with inflation expected to have cooled significantly last month, it is an indication that the worst of the cost-of-living squeeze might be over. But there lies the rub. If households are feeling more confident and have a bit more room in the budget, they are likely to spend that cash, which could prove inflationary.”
Danni Hewson also added that “there’s also the continued tightness in the labour market that could force employers’ hands and push them to keep offering bigger pay packets to attract the staff they need to thrive.”