LONDON (Reuters) – British wages, excluding bonuses, rose at their slowest pace since October 2022 in the quarter to the end of January, while the unemployment rate rose slightly against expectations, new data showed on Tuesday which could temper fears about the evolution of inflation.
According to the Office for National Statistics (ONS), UK wages, excluding bonuses, increased by 6.1% in the three months to the end of January compared to the same period a year ago .
Economists polled by Reuters on average forecast an increase of 6.2% over the November-January period on an annual basis.
The average weekly salary, excluding bonus, also increased by 6.2% over the three months to the end of December.
The unemployment rate in the United Kingdom, meanwhile, rose from 3.8% to 3.9% between November and January, compared to economists’ forecast of 3.8%. The ONS is, however, still in the process of revising its household survey.
In the foreign exchange market, the pound sterling weakened against the US dollar and the euro following the release of labor market data.
The Bank of England (BoE), which will hold its next monetary policy meeting on March 21, is closely monitoring wage developments. It has identified wage growth and service price inflation as the two most important indicators in determining whether underlying inflationary pressures are easing enough for it to cut its policy rates.
Wage growth is roughly double its rate before the COVID-19 pandemic, when inflation was close to the central bank’s 2% target.
While some BoE officials expect wage growth to decline as headline inflation falls, others fear labor shortages seen since the pandemic could slow that process.
“The data released today is unlikely to justify a major policy change from the Bank of England, particularly given wage growth which remains robust and growing concerns that it could lead to “persistence of pressures on prices”, comments Yael Selfin, chief economist at KPMG United Kingdom.
“However, we expect a weakening of the labor market in the coming months, which should dampen the dynamics of wage growth and increase the prospect of a reduction in interest rates from the summer,” he said. she added.
(Reporting Suban Abdulla and David Milliken; Claude Chendjou, edited by Blandine Hénault)
Copyright © 2024 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
