UK wages: pay growth outstrips inflation rate for the first time in two years, says ONS

UK average wages have outstripped the rate of inflation for the first time in two years according to the Office for National Statistics (ONS), with hopes that this is the first signs of the cost of living crisis easing for millions.

The ONS said that regular wages rose by 7.8% in the three months to August. In the same period. This was 0.7% higher with Consumer Price Index (CPI) inflation taken into account. Revised ONS figures in the previous three months to July saw average wage rises exceeded inflation by 0.1%, marking the first time wages are rising faster than prices since October 2021.

Chancellor Jeremy Hunt said: “It’s good news that inflation is falling and real wages are growing, so people have more money in their pockets. To keep this progress, we must stick to our plan to halve inflation.”

In the past few years, many workers have taken part in strikes to fight for above-inflation pay increase. This included nurses, other NHS staff, teachers and transport workers. Unite trade union said that the statistics over the average wage rises was "small respite" for those hit worst by the cost of living crisis. General secretary Sharon Graham said: “Data suggesting pay rises have finally caught up with corrosive inflation will give hard-working families some small respite from the damage that has been wrought on household incomes by years of economic incompetence and mismanagement.”

While the news that average incomes are rising at a faster rate than inflation, it was also announced that the number of UK workers on payroll fell by around 11,000 to 30.1 million people month-on-month in September. Vacancies also dropped in the three months to September, with 988,000 fewer positions available. This was down by 43,000 on the previous quarter, marking the 15th drop in a row.

The rate of inflation for the year to August was set at 6.7%. While the rate is dropping, and is expected to drop once again to 6.5% in September according to the ONS, it remains far off the Bank of England's target. The currentl level is more than three times higher than the target CPI rate of 2%.