UK pay deals cool for first time in 2023, easing pressure on BoE
Pay deals awarded by British employers cooled for the first time this year in the quarter to July, which may calm the worries of Bank of England officials who fear wage growth is feeding inflation, a survey showed on Wednesday.
Median basic pay deals in the three months to the end of July fell to 5.7 per cent following six consecutive quarters at a record 6 per cent, human resources publication and data provider XpertHR said.
Pay awards remained below the rate of inflation. British consumer price inflation cooled to 6.8% in July from 7.9 per cent in June.
The BoE, which hiked interest rates to 5.25 per cent in August to tame stubborn inflation, is closely monitoring wage growth in the private sector and has said it will keep raising Bank Rate if inflationary pressure persists.
Sheila Attwood, senior content manager at XpertHR, said pay awards had likely hit their peak and expects the gap between pay deals and inflation to narrow.
“Our figures of a decrease in wage rises might ease minds at Bank of England, fearful of the effects of a wage-price spiral,” Attwood said.
However, official figures from the Office for National Statistics showed annual wage growth excluding bonuses rose to 7.8 per cent in the three months to June, the highest in records going back to 2001.
XpertHR said median pay awards for the public sector stood at 5 per cent in the year to July, up from 3.2 per cent in the year before.
Reuters – by Andy Bruce