Wage Growth Slumps to a Year-Long Low

Wage Growth in the UK Lands on a Chill Cruise

According to the latest numbers from the Office for National Statistics (ONS), the “pay‑sparky” has taken a slow jog—its growth rate has dipped to the lowest level in over a year. Yet, despite the sluggishness, it still outpaces the rate of inflation, keeping real wages on the upward track for the sixth month straight.

Monthly Breakdown: Regular Pay vs Bonuses

Regular pay alone (excluding bonuses) grew by 6.2% in the December quarter. That’s the slowest pace since October 2022.
When you factor in consumer price inflation, regular wages rose by just 1.9% on a 2019‑to‑2023 basis.

Experts Talk: What’s the Real Story?

Jake Finney, economist at PwC UK, muses: “The Bank of England’s looming concern is that the labour market may still be too hot to cool down enough to hit the 2% inflation target.”

Liz McKeown, director of economic statistics at the ONS, notes: “Employment growth has slowed over the past year. There’s also been a rise in people neither working nor looking for work—many citing long‑term illness.”

Policymakers Stay Optimistic

Jeremy Hunt, the Chancellor, says it’s “good news” that real wages are climbing and unemployment is low, but he reminds us the “job isn’t done.” He adds: “We’re slashing taxes to get people back to work and, in turn, grow the economy. It’s a plan we’re sticking to.”

Samuel Tombs from Pantheon Macroeconomics warns that the official unemployment data may not reflect the full picture. “The current unemployment rate gives a misleading impression of labour‑market tightness,” he argues. “We expect the Monetary Policy Committee to give it less weight than usual. Low interest rates are still on the agenda, but it remains to be seen if the first cut will happen before the end of Q2.”