Wage Growth Slows Prompting Interest Rate Cut Hopes

Published / Last Updated on 15/10/2024

Marking the start of a busy two days for the Office for National Statistics (ONS), today the ONS released its latest UK figures wages inflation i.e., the rate at which pay is rising with Consumer Prices Index infation figures due tomorrow.

Average wages inflation the period from June to August 2024:

  • Employees’ average regular earnings growth (excluding bonuses) was 4.9% pa; down from April to June 2024, at 5.4% pa.
  • Total earnings growth (including bonuses and special ‘one off’ payments to NHS and civil service staff) was 3.8% pa, down from 4.6% pa (April to June 2024).   
  • Growth in real terms, adjusted for Consumer Prices Index inflation including owner occupiers’ housing costs (CPIH), was 1.9% for regular pay and 0.9% for total pay.
  • Public sector average pay growth was 5.2% pa, down from 5.7% pa.
  • Private sector average pay growth was 4.8% pa, up from the last quarter.
  • Manufacturing sector saw the largest annual regular growth rate at 6.0% pa.

Comment

Overall, the picture is that payrises are slowing down as inflation comes down and this leaves room for inflation to fall (ONS figures due tomorrow) and therefore interest rates to fall which may not be good for savers but will be welcome new to mortgage borrowers and first time buyers.  We expect inflation to tumble tomorrow, perhaps more than expected and then room for two 0.25% interest rate cuts by the Bank of England on November 7th and then 19th December (to spread some festive cheer).

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