The pace of UK wage growth has exceeded inflation for the first time in nearly two years, according to official figures.
The Office for National Statistics (ONS) said that regular earnings saw a nearly record-breaking increase of 7.8 percent in the three months to August compared to last year, and were 0.7 percent higher with Consumer Prices Index (CPI) inflation taken into account.
Revised figures from the ONS show that annual growth in regular pay, excluding bonuses, surpassed CPI inflation by 0.1 percent in the preceding three months up to July. This contrasts with the initial estimate of flat real earnings growth.
It means that wages are now rising faster than prices for the first time since October 2021.
Chancellor Jeremy Hunt said: “It’s good news that inflation is falling and real wages are growing, so people have more money in their pockets. To keep this progress, we must stick to our plan to halve inflation.”
The UK jobs market continued to soften in the three months to August with vacancies dropping to 988,000 in the three months to September. This marks the 15th consecutive fall.
Alice Haine, personal finance analyst at Bestinvest, commented: “The cooling jobs market appears to be finally feeding through to wage growth, with pay rises easing slightly after a summer of bumper increases.
“Regular pay, excluding bonuses, rose 7.8 percent on the year in the three months to August – a similar level to the record growth rate achieved in the previous two periods when one-off bonus payments to NHS and civil service staff inflated the figures.”
Meanwhile real total pay, which includes bonuses, grew 8.1 percent over the same period, slightly down on the 8.5 percent seen in the previous period.
Ms Haine said: “In real terms, once inflation is factored in, real pay grew 1.1 percent and total pay 1.3 percent – positive news for households as it means incomes are finally gaining in value after being pummelled during the cost-of-living crisis.”
