UK wages surpass inflation for first time in almost two years

UK wages are outstripping inflation for the first time in nearly two years, according to the latest figures from the Office for National Statistics (ONS). 

Regular earnings rose by a near record 7.8% in the three months to August and were 0.7% higher with Consumer Prices Index (CPI) inflation taken into account. Revised figures from the ONS revealed that annual growth in regular pay excluding bonuses exceeded CPI inflation by 0.1% in the previous three months to July, having initially estimated flat real earnings growth.

It means that wages are now rising faster than prices for the first time since October 2021. Chancellor Jeremy Hunt said: “It’s good news that inflation is falling and real wages are growing, so people have more money in their pockets. To keep this progress, we must stick to our plan to halve inflation.”

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It will come as a relief to workers who have seen their pay packets eroded by sky high inflation for nearly two years. Wages are now surging by record levels seen outside of the pandemic-skewed era, with regular pay jumping by an upwardly revised high of 7.9% in the three months to July, according to the ONS.

Inflation is also easing back, falling to 6.7% in August, having reached a 41-year high of 11.1% last October, and with official figures on Wednesday expected to show another decline to 6.6%. The latest data shows that total wages including bonuses jumped by 8.1% in the three months to August, although this was affected by NHS and civil service one-off payments.

Real total