Record wage growth in UK ups pressure for further interest rate hikes

(Xinhua) 08:36, June 14, 2023

LONDON, June 13 (Xinhua) -- Wages in the United Kingdom (UK) have risen at their fastest rate on record, the Office for National Statistics (ONS) said on Tuesday, heaping pressure on the Bank of England (BoE) to continue raising interest rates.

Annual growth in employees' average total pay was 6.5 percent (including bonuses) or 7.2 percent (excluding bonuses) in the three months to April.

However, the wage growth still lagged consumer price inflation at 8.7 percent in April. In real terms, total pay fell by 2 percent and regular pay fell by 1.3 percent year-on-year in February to April.

The BoE is expected to raise the benchmark interest rate to tame inflation and cool the country's economy.

"The renewed pick-up in wage growth in April will add fuel to the recent rise in gilt yields and expectations for the future path of bank rate by fanning the impression that the UK has a unique problem with ingrained high inflation," said Samuel Tombs, a UK economist.

From 0.1 percent to 4.5 percent, the BoE has raised the interest rate 12 times in a row since December 2021.

Hussain Mehdi, macro and investment strategist at HSBC Asset Management, said: "For the Bank of England, wage growth is a big problem - it is simply at too high a level to allow inflation to hit the 2 percent (inflation) target."

The UK employment rate grew to 76.0 percent in February to April, 0.2 percentage points higher than in the three months to January, the ONS said.

The unemployment rate was estimated at 3.8 percent, 0.1 percentage points higher than in the previous quarter. 

(Web editor: Zhong Wenxing, Liang Jun)


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