Wage growth has caught up with rising prices for the first time in more than a year, according to the latest official figures.
Regular pay, excluding bonuses, rose by 7.8% in May to July compared with the same period last year. Inflation, a measure of how fast prices of goods and services are rising, rose at the same pace over the same period.
“This means people's real pay is no longer falling,” said the Office for National Statistics (ONS).
“Earnings in cash terms continue to increase at a record rate outside the pandemic-affected period,” Darren Morgan, director of economic statistics at the ONS said, while inflation has come down from its highs.
However, the unemployment rate rose to 4.3% in the three months to July from 4.2% a month earlier, and job vacancies fell again, to below a million. Chancellor Jeremy Hunt said: “It's heartening to see the number of employees on payroll is still close to record highs and that our unemployment rate remains below many of our international peers.”
He said wage growth “remains high”, but added: “For real wages to grow sustainably we must stick to our plan to halve inflation.” Mr Morgan told the BBC's Today programme that the increase in unemployment was driven by men, and by those out of work for up to six months.
“So it seems that people who are re-entering the jobs market after telling us they are unavailable for work or they've lost their job, are taking longer to find work compared to what we saw earlier in the year.”
What it means for pensions
The data is crucial in setting the rise in the state pension from next April. This is governed by what is known as the triple-lock, which sets the increase of the highest of average earnings, inflation or 2.5%.
The earnings for that calculation – which are total pay, including bonuses – was recorded at 8.5%.
The inflation figure is yet to be published, but seems unlikely to be higher. That means the state pension is likely to rise by 8.5%, which would be a weekly increase of £13.30, or an annual increase of £691.60 on the basic state pension – taking the total for the year to £8,814.
For those receiving the new flat-rate state pension, going to those who reached state pension age after April 2016, the rise is set to be £17.35 a week, or £902.20 a year – taking the total for the year to £11,502.
— CutC by bbc.com
