UK wage growth slowed to 3.9% in the three months to July, according to official figures, as a fresh cost of living squeeze puts pressure on workers ahead of a crucial Bank of England interest rate decision.
Key facts
- Average total earnings growth, including bonuses, eased to 3.9% in the three months to July.
- This is down from 4.1% in the three months to June.
- The figure matched forecasts from City economists.
- The cost of living squeeze is being fuelled by oil price rises linked to the Iran war.
- The pay figure is likely to dictate the rise in the state pension triple lock.
Wage growth in the UK slowed in July as workers came under pressure from a renewed cost of living squeeze, according to figures from the Office for National Statistics (ONS). The data highlights the challenge facing the Bank of England as it prepares to set interest rates.
Average growth in total earnings, including bonuses, eased to 3.9% in the three months to July, down from 4.1% in the three months to June, the ONS figures show. The result matched the forecasts of City economists, according to the Guardian.
The renewed cost of living squeeze has been fuelled by oil price rises linked to the Iran war, adding to the financial pressure on workers, the Guardian reported.
The pay figure is significant beyond current workers, as it is likely to dictate the rise in the state pension triple lock, according to the Guardian. The triple lock mechanism can be tied to earnings growth, meaning the latest data could shape pension increases.
The slowing wage growth arrives at a delicate moment for the Bank of England, which must weigh inflationary pressures against signs of a squeeze on household incomes as it prepares its interest rates decision.
Why it matters
Wage growth data directly influences the Bank of England's interest rate decisions, which affect mortgages, loans and savings for millions of households. The figure also helps determine how much the state pension rises under the triple lock, making it important for pensioners as well as workers.
Frequently asked questions
How much did UK pay growth slow to?
Average growth in total earnings, including bonuses, eased to 3.9% in the three months to July, down from 4.1% in the three months to June, according to ONS figures.
Why does the pay figure matter for pensioners?
According to the Guardian, the figure is likely to dictate the rise in the state pension triple lock, which can be linked to earnings growth.
What is driving the cost of living squeeze?
The Guardian reports the renewed cost of living squeeze is being fuelled by oil price rises linked to the Iran war.