UK wage growth unexpectedly stalls even as jobless rate hits new four-decade low
LONDON (Reuters)- Workers in Britain have still not seen their wages rise more quickly than inflation despite unemployment falling to its lowest level since 1975, official data showed on Tuesday.
Wages in the three months to February rose by 2.8 percent, unchanged from the three months to January and weaker than a median forecast of 3.0 percent in a Reuters poll of economists.
Inflation over the period, as measured by the consumer price index, was around 2.9 percent.
The ONS said the unemployment rate unexpectedly fell to 4.2 percent, its lowest since the three months to May 1975.
The Bank of England has said it expects the fall in unemployment to start pushing up pay more quickly, the main reason why it has said it is likely to raise interest rates more quickly than it previously thought.
British households – whose spending is the main driver of the country’s economy – have been struggling from the double whammy of slow wage growth and a jump in inflation, due mostly to the fall in the value of the pound after the 2016 Brexit vote.
Excluding bonuses, earnings rose by 2.8 percent year-on-year in the three months to February, matching the median forecast in the Reuters poll, the ONS said.
An ONS spokesman said bonus payments in February were lower than a year earlier but it was too soon to draw conclusions about the bonus season as a whole.