Pay growth in the UK has slowed to its weakest level in more than five years, according to the latest figures from the Office for National Statistics.
Average earnings, excluding bonuses, rose by 3.8% in the three months to January, down from 4.2% in the previous period. While this marks a continued cooling in wage growth, earnings are still increasing faster than inflation, which stood at 3% in January.
The labour market remains relatively steady. The unemployment rate held at 5.2%, close to a five-year high, while the number of people on payrolls increased by around 20,000 in February, bringing the total to 30.3m.
Public-sector pay continues to outpace the private sector. Annual average earnings growth reached 5.9% in the public sector, compared with 3.3% in the private sector over the same period.
Job vacancies showed little movement overall. Early estimates indicate a slight decline of 6,000 roles, leaving 721,000 vacancies in the three months to February.
These figures come ahead of the Bank of England’s latest interest rate decision. While there had been expectations of a rate cut, this now appears unlikely. Rising fuel and energy costs, linked to escalating tensions in the Middle East, have increased the risk of inflation picking up again.
As a result, policymakers are expected to hold borrowing costs steady, balancing slowing wage growth against ongoing inflation pressures.
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