UK average pay has managed to exceed inflation, rising to an annualised rate of 7.8% between June and August.
With wages exceeding inflation for the first time this year, workers will be earning above the cost of price rises on average according to the latest figures.
The notable increase in wage inflation earlier this year caused a dilemma for the Bank of England as it continued rate hikes to 5.25%. While average wages exceeding inflation is a good thing, it doesn’t paint a clear picture of what’s happening across the economy and in different sectors.
With wage growth at different paces when comparing to public and private sector workers, many employed and self-employed people are still experiencing below inflation earnings.
Additional factors that could also be on the horizon are a slowing economy and falling prices which could lead to fewer jobs and pressure on wages falling.
However, with high interest rates set to stay around for longer, and a resilient economy, there may be further inflationary pressure also called ‘sticky inflation’ persisting well into the new year.
Other factors to also consider in the wage calculations are the higher cost of petrol since July and rising rent costs, which are driving down disposable income across the UK.
For many, it’s too early to tell whether wages are really outpacing the current high cost of living, but it’s an early indicator that UK employers have managed to remain resilient despite tightening credit conditions – and workers are now benefitting from better pay conditions.
