UK wage growth eased in the three months to August to its slowest pace since the pandemic, making a case for the Bank of England (BoE) to cut interest rates further before the end of the year.
In the three months leading up to August, pay growth excluding bonuses decreased to 4.9%, down from a previous rate of 5.1%. This marks the slowest pace of wage growth since June 2022. When bonuses are included, annual wage growth fell to 3.8%, down from 4% and slightly surpassing economists’ expectations of 3.7%. It was the slowest pace of growth since November 2020.
This data is closely watched by the financial markets, as it will influence how quickly the Bank can lower UK interest rates.
The BoE has been closely monitoring wage growth, particularly amid concerns that sustained increases could keep inflationary pressures high, especially in the labour-intensive services sector.