LONDON (Reuters) – UK wage growth experienced one of its strongest accelerations in the three months to end November, official data showed on Tuesday, which could bolster the Bank of England’s pursuit of its monetary tightening.
The average weekly salary, excluding bonuses, increased by 6.4% in September-November compared to the same period of 2021, its largest increase since the start of the statistics in 2001, outside of the pandemic period.
Including bonuses, wage growth is also up 6.4%, according to the Office for National Statistics (ONS).
Economists polled by Reuters on average forecast an increase of 6.2% with bonuses and 6.3% excluding bonuses.
The ONS said Britain’s unemployment rate held steady at 3.7%, a figure in line with the Reuters consensus, close to its lowest level in nearly 50 years.
The ONS figures show a significant disparity between wage growth in the private sector, which is up sharply (+7.1%), and that in the public sector, which is much weaker (+3.3%).
The Bank of England fears that the acceleration in wage growth could hamper its efforts to bring down inflation, which reached 10.7% year on year in November. Data for December will be released on Wednesday.
BoE Governor Andrew Bailey said Monday that a labor shortage was a major risk to the inflation forecast.
“The latest labor market data keeps the pressure on the Monetary Policy Committee to raise BoE rates by 50 basis points next month, rather than slowing the pace,” said Samuel Tombs, economist at Pantheon Macroeconomics.
On the markets, the pound sterling gained more than 0.2% against the dollar and against the euro.
(William Schomberg and Sachin Ravikumar, French version Laetitia Volga, edited by Blandine Hénault)