Chamber News
Wages overtake inflation for first time in nearly two years
18 October 2023 • Sarah Medcraf
Average pay growth rose above inflation for the first time in almost two years, in a sign that the squeeze on living costs may be starting to ease.
Wages rose at an annual rate of 7.8% between June and August, figures show. That was higher than average inflation over the same three months, which measures the rate at which prices rise. Revised figures showed pay overtook inflation in the three months to July, meaning wages are outpacing prices for the first time since October 2021. However, the rise in wages is an average and does not mean that cost of living pressures are subsiding for everyone.
There continues to be a big gap between public and private sector pay. Wage growth for public sector workers reached 6.8% between June and August, which the Office for National Statistics (ONS) said was the biggest increase since comparable records began in 2001. But the average pay rises for private sector employees was 8%.
People employed in finance and business services saw the largest rise in annual pay, followed by those in the manufacturing sector.
The rate of inflation has been slowing but, at 6.7% for the year to August, it remains more than three times higher than the Bank of England's 2% target. New inflation figures will be released on Wednesday, which are expected to show price rises are continuing to slow.