UK Wages continued to climb in the UK but failed to keep pace with inflation despite the largest rise outside of the COVID pandemic.
Pay, excluding bonuses, increased at an annual pace of 6.7% between October and December 2022, the Office for National Statistics (ONS) said. However, when adjusted for inflation, regular pay fell by 2.5%.
Workers in the private sector saw a boost of 7.3% to their pay, while the strike-engulfed public sector saw a more modest increase of 4.2%.
Real earnings are falling at their fastest rates since the financial crisis due to high inflation, leaving them no higher now than before the pandemic.
Still, the increases might sound the alarm at the Bank of England, as it tries to bring UK inflation down from double-digit levels towards its 2% target. Inflation — the rate at which prices are rising — is running at 10.5%.
Unemployment edged up slightly to 3.7% while vacancies fell by 76,000 in November to January, marking the seventh consecutive quarterly fall.
The U.S. dollar retreated in early European trade this morning ahead of the latest readout of U.S. consumer inflation, while the yen gained upon the nomination of the next governor of the Bank of Japan.
The dollar has traded in something of a holding pattern over the last few days as traders awaited the release of the latest U.S. consumer price index, which could provide further clues on the Federal Reserve’s policy outlook.
The U.S. central bank earlier this month raised interest rates by 25 basis points, tempering the pace of its rate hikes, but the bank’s policymakers were keen to say that the fight against inflation continues and further increases should be expected.
Attention thus turns to today’s January inflation report, with the headline number expected to show that consumer prices rose at an annual pace of 6.2% in January, down from 6.5% in December and well below June’s four-decade peak of 9.1%.