According to the new Office for National Statistics labour market survey, the rate of increase in pay rises is now at its fastest in over a decade, with average pay rises now reaching 3.4%
Rate Of Increase In Pay Rises Reaches 3.4%
The rate of increases in pay rises has risen again, with average pay rises now at 3.4% for the period December 2018 to February 2019, compared with the equivalent quarter in 2018, according to the Office for National Statistics. This is up from 3.3% for the period September to November 2018. When bonuses are added in, the rate of increase for the 3 months to the end of February 2019 was 3.5%. Once adjusted for inflation, the real terms increase was 1.5% excluding bonuses, and 1.6% including bonuses. This comes despite the Brexit shambles, and represents a turnaround from the squeeze on living standards that existed at the beginning of 2018, where the rate of increase in pay was barely matching the increase in inflation. And prior to that, there was actually a real terms decrease in pay, with inflation outstripping pay rises (e.g. in the 3 months to July 2017, pay in real terms both including and excluding bonuses fell by 0.4%).
Office for National Statistics Survey
The Office for National Statistics found that for the 3 months to February 2019:-
- Average pay rises have increased by 3.4% excluding bonuses, and by 3.5% including bonuses, compared with the equivalent period in 2018. This represents the fastest rate of increase since July 2008, when average pay rises increased by 3.5% including bonuses and by 3.7% excluding bonuses
- Adjusted for inflation, the real terms increase in average pay rises excluding bonuses was 1.5%, and 1.6% when including bonuses
- Unemployment stands at 1.34 million (3.9% of the workforce), a fall of 27,000 during the 3 months to February 2019. It is the lowest level of unemployment since the 3 months to January 1975, and represents a year on year fall of 76,000
- The number of people in work is 32.72 million, an increase of 179,000 during the 3 months to February 2019.
- 8.54 million people are economically inactive (neither in or seeking work), a fall of 114,000 during the 3 months to February 2019.
Inflation Remain At A 2 Year Low Of 1.8%
As the increase in pay rises has risen to its fastest rate in over a decade, UK inflation fell in January 2019 to a 2 year low of 1.8% in terms of the Consumer Prices Index (CPI) 12-month rate. This was down from 2.1% in December 2018, and is the lowest rate since January 2017, when inflation also stood at 1.8%. Inflation has remained at 1.8% in both February 2019 and March 2019. During the 2 year 2 month period between January 2017 and March 2019, inflation reached a high of 3.1% in November 2017.
The main reasons for the fall in inflation, were a fall in gas, electric, and petrol prices. However, with fuel prices now on the increase again, this could well lead to a rise in inflation over the coming months.
