UK Wage Growth Surges, Fueling Speculation of 50bp Rate Hike

UK wage growth surprise could spell repeat 50bp rate hike

A few months ago it looked like UK wage growth had peaked. Now it is running at its fastest pace yet, and, depending on next week's inflation figures, it could push the Bank of England into another 50bp rate hike in August.

 

The latest UK wage data is a blow for the Bank of England in its battle against high inflation. Private sector regular pay is now growing at more than 9% on a three-month annualised basis, which as the chart below suggests, is the highest it has been since the depths of the Covid-19 pandemic (when the figures were highly skewed due to the furlough scheme). Some of this can be explained by backward revisions, but it nevertheless bolsters the chances of a repeat 50 basis point rate hike in August – although this will depend heavily on whether next week’s services inflation comes in higher than expected too.

 

UK wage growth has picked up again

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