UNEMPLOYMENT has fallen again but wage growth continued to slow, new data from the Office for National Statistics (ONS) has found.
The findings from the latest wage data mean that the state pension will likely rise by £460 from next April, this is because of the triple lock.
The triple lock sees the state pension rise in line with whatever is highest out of: wages, 2.5% or September’s inflation figures.
Wages, excluding bonuses, grew by 5.1% from May to July.
The last time growth was lower than this was in April to June 2022, when it was 4.7%.
The latest inflation figures for August are set to be announced next week if things continue the way they are going, wages will remain the higher figure when the state pension increase is revealed.
Meanwhile, the rate of UK unemployment fell for the second month in a row.
Figures released today show the rate dipped to 4.1%, down again on the previous month’s reading of 4.2%.
This is down from 4.4% for the three months prior to this.
The latest figures from the ONS also estimate that there were 857,000 job vacancies in June to August 2024, down 42,000 on the quarter and 143,000 on the year.
However, this is still 61,000 above pre-Covid levels.
Lower unemployment rates are good news as it means more people are in work and earning money.
It also means more money is being pumped into the economy which can see GDP rise.
When GDP goes up, it means the economy is growing and the Government has more funds to spend on public services.
That means more money pumped into local libraries, schools and transport networks.
It can also see taxes fall as the Government has less of a need to top up its coffers.
While wages are rising, they are going up at a slower rate than before.
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.
Steady growth is expected to keep up with rising prices so that workers are not worse off.
In recent years wage growth has been higher as employers have bumped up pay to keep up with runaways inflation.
Liz McKeown, director of economic statistics at the ONS, said: “Growth in total pay has slowed markedly again as one-off payments made to many public sector workers in June and July last year continue to affect the figures.
“Basic pay growth also continued to slow, though less sharply.”
She added: “When taken together on a comparable basis, our different measures all show growth in the number of employees over the latest quarter, though annual growth has slowed over the year.”
Today’s figure means millions of people will likely get a £460 rise in their state pension next year.
This is because of the triple lock which sees the state pension rise in line with whatever is highest out of: wages, 2.5% or September’s inflation figures.
However, increasing the state pension will hit thousands of pensioners with a tax bill as a result of personal allowance thresholds being frozen until 2026.
The personal allowance is how much money you can earn before you have to pay tax on it. Under current rules, this is up to £12,570 in a tax year.
Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group said: “This inflation-beating uplift will be some comfort for pensioners grappling with high energy prices and, for those not claiming pension credit or other benefits, staring into their first winter without the £300 fuel allowance. “
“However, a new state pension of £11,962.60 will also be 95% of the personal allowance, currently frozen at £12,570 until 2028 – by contrast, in 2021/22 the new state pension was equivalent to 74% of the allowance. “
“This means pensioners will need just £607.40 of other income before paying income tax,” he added.
