UK Wage Growth Remains Above Inflation Just Before Bank of England’s Interest Rate Decision

Pay growth in the UK remained stable, still exceeding inflation prior to the Bank of England’s upcoming interest rate decision.

According to the Office for National Statistics, the UK average weekly earnings increased by 5.9% over the three months ending in January compared to the previous year. This figure remained consistent with the previous quarter but continued to surpass inflation, which reached 3% in January.

Liz McKeown, director of economic statistics at ONS, stated: “Overall pay growth continues to be relatively robust, with significant increases in both public and private sectors despite a modest slowdown in the latter during the most recent period.”

The unemployment rate stood at 4.4%, remaining unchanged since the three months ending in December.

The number of payroll employees rose by 9,000 from December to January, following a decrease of 14,000 during October and November. This annual figure reflects an increase of 72,000.

Preliminary estimates by the ONS indicate there were 816,000 job vacancies from December to February, showing little change from the previous quarter.

These recent statistics arrive just ahead of the Bank of England’s interest rate decision scheduled for later Thursday. Analysts expect the central bank to keep rates steady at 4.5%, as it grapples with the repercussions of US president Donald Trump’s trade war alongside mixed economic signals from the UK.

With persistent inflation and decelerating economic growth, several businesses have expressed concerns regarding escalating costs tied to rising minimum wage and national insurance contributions that take effect on April 1 and April 6, respectively.

This complexity adds to the economic landscape for Chancellor Rachel Reeves as she prepares for the spring statement on March 26.

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