WAGES are rising for millions of workers across the UK as unemployment also increases, new figures reveal.
Growth in regular pay, excluding bonuses, grew by 6% between January and March, compared to the same time period last year.
The latest figures from the Office for National Statistics (ONS) also reveal wages in real terms grew by 2% for regular pay.
Wage growth in real terms takes into consideration how much salaries are rising in comparison to inflation.
It means workers’ wages are keeping above the cost of living.
But the ONS’ latest figures reveal the jobless rate continues to increase, with unemployment rising to 4.3% in the three months to March.
The ONS said annual average earnings across the public sector rose by 6.3% between January and March compared to the same three months in 2023.
It said the manufacturing sector and the finance and business services sector saw the largest annual regular growth – 6.8%.
Regular pay between January and March, excluding bonuses, was flat compared to the three months to February this year.
The latest figures from the ONS also reveal the number of vacancies between February to April 2024 was 898,000.
This is a decrease of 26,000 from the previous three months and 188,000 lower than a year before.
However, unemployment stood at 4.3% between January and March this year, compared to the same time period last year.
That’s the highest it has been since May to July last year and up from 4.2% in the previous three months.
Chancellor Jeremy Hunt said: “This is the 10th month in a row that wages have risen faster than inflation, which will help with the cost-of-living pressures on families.
“While we are dealing with some challenges in our labour supply, including pandemic impacts, as our reforms on childcare, pensions tax reform and welfare come online I am confident we will start to increase the number of people in work.”
ONS director of economic statistics Liz McKeown added: “We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
“At the same time the steady decline in the number of job vacancies has continued for a twenty-second consecutive month, although numbers remain above pre-pandemic levels.
“Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years.”
Rising wages, particularly in real terms, is good news for workers as it means their salaries are keeping pace with the cost of living.
But it can also drive inflation, as businesses raise the price of their services and goods to stay profitable.
The Bank of England raises its base rate to control runaway inflation, with its rate currently sat at 5.25%.
But a rise in interest rates spells bad news for homeowners who are forced to pay out more on their mortgages.
Cooling inflation in recent months has seen economists predicting the BoE will lower interest rates later this summer though.
That means mortgage rates should then fall.
However, Alice Haines, personal finance analyst at Bestinvest, said the latest wage growth data could mean interest rates come down slower than expected.
She said: “With pay packets stretching much further than they did a year ago, household budgets may feel slightly more comfortable with the prospect of an imminent rate cut delivering another boost to consumer finances after a challenging couple of years.
“The likelihood of a summer rate cut, with many consumers pinning their hopes on a move as early next month, may be slightly dented by the better-than-expected pay growth data.”
Last week, Andrew Bailey, BoE governor, said the latest inflation figures were “encouraging”, and it expected it to slow to the bank’s 2% target in the “next couple of months”.
Inflation stood at 3.2% in March, the latest figures revealed.
However, Mr Bailey said it needed “more evidence” inflation will stay low before it would consider cutting interest rates.
The latest inflation figures will be released next Wednesday (May 22).
Growing wages is good news, especially when it’s higher than the rate of inflation, what’s known as real terms wages.
It means households have more purchasing power and a lot of that money will go back into the economy.
But rising wages have previously been blamed for keeping inflation high by Bank of England bosses.
Wage growth can also sometimes spike inflation and that burden is passed back on to households with businesses increasing the price of goods and services.
The Bank of England may decide to maintain a high base rate which affects borrowing costs.
The rate is used by high street banks to set the interest rates it offers to customers, including loans, credit cards and mortgage repayments rise.
The National Minimum and National Living wages rose for millions across the UK last month.
This means some people would be better off by £1,800 a year.
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