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UK wages continue to outpace inflation

Cherry Reynard
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Cherry Reynard

UK wages continued to outstrip inflation, rising 3.2% in the year to March.

However, this was a slower pace than seen in February, when wages rose by 3.5%.

Meanwhile, the unemployment rate in the first three months of the year hit a near-45 year low, at 3.8%, while employment was the joint highest on record at 76.1%.

Average weekly earnings climbed 1.3% year-on-year. This is equivalent to to a weekly wage of £498 per week, compared to £483 in early 2018.

However, wages remain below the level seen just before the financial crisis.

Laura Suter, personal finance analyst at investment platform AJ Bell, said: “Wages have now been higher than inflation for more than a year, giving a welcome boost to household finances. After years of below-inflation increases, with workers hit with a torrid combination of sluggish wage growth and higher inflation, these rises should help to give some households more breathing space… 

“However, the hangover of the financial crisis is still hitting people’s pockets, as wages remain lower than before the 2008-09 recession once adjusted for inflation.”

Tom Stevenson, investment director for personal investing at Fidelity International, said that wages were still the bright spot of the UK economy and the extension of Brexit uncertainty may have played a part: “The murky outlook is leading businesses to hire now with the option to fire later rather than make irreversible investments in new kit.

“Perhaps it is still too soon to get ahead of ourselves, though –  a week before new inflation data, there’s a question mark over how real the earnings growth is. Rising wages are bound in due course to feed through into wider price rises.”