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The Telegraph
The Telegraph
14 Feb 2023


Record wage growth piles pressure on Bank of England over interest rates
Regular pay grew by 6.7pc in October to December but was outstripped by inflation Credit: Hollie Adams/Bloomberg

Average wages grew at the fastest rate ever seen outside the pandemic, new figures show, increasing pressure on the Bank of England amid concerns it will fuel inflation.

Regular pay which excludes bonuses grew by 6.7pc in October to December, data from the Office for National Statistics shows.

The strong pay growth is likely to make for uncomfortable reading for Bank of England rate-setters who are trying to tame rampant inflation. 

The high figures will raise concerns that more interest rates may still be needed, even as the Bank earlier this month signalled the end of its aggressive tightening cycle is near. 

But with inflation still in double digits at 10.5pc, most workers' purchasing power continues to deteriorate. 

Workers in the private sector saw a boost of 7.3pc to their pay, while the strike-engulfed public sector saw a more muted increase of 4.2pc.

In real terms, for all workers average wages when including bonuses fell by 3.1pc while regular salaries fell by 2.5pc.

These are among the largest falls in growth since comparable records began in 2001, according to the ONS. 

The growing tensions over salaries failing to keep pace with inflation were also apparent in the number of working days lost to industrial action, which reached 843,000 in December. This is the highest since November 2011. 

One positive sign, however, was that a rise in part-time workers helped boost the employment rate to 75.6pc in October to December, an increase of 0.2 percentage points. 

Inactivity also fell by 0.3 points on the quarter to 21.4pc. It was mainly driven by 16 to 24 year olds.

Even as pay growth remains strong, the signs are mounting that the labour market is starting to cool. Unemployment edged up slightly to 3.7pc. 

Meanwhile, vacancies fell by 76,000 in November to January, marking the seventh consecutive quarterly fall. The ONS said it reflects uncertainty from economic pressures holding back recruitment.