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UK pay growth eases by less than forecast

‘Sticky’ wage inflation poses a dilemma for Bank of England policymakers.

13 February 2024

UK jobs figures this morning re-emphasised the difficult and likely longer path for the Bank of England in their rate policy setting. While private sector wage growth slowed to 6.2% from 6.6% at the previous reading, this compared to forecasts of a slowdown to 6.0%, with the persistent and elevated nature of wage inflation squashing any lingering hopes for early rate cuts next month.

Core inflation will be the first determinant for the Bank and slowing headline inflation should pass through to slowing wage growth inflation, but the observed lag can be frustrating. UK inflation data (due tomorrow morning) will most certainly sort the doves from the hawks so to speak but the tea leaves are currently spelling much stickier inflation than the Bank would expect at this stage of the cycle.

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Charles Hepworth

Investment Director
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