What's going on?
Official data released on Tuesday showed that UK wages grew at their fastest pace in a decade – for the second month in a row.
What does this mean?
History doesn’t repeat itself, but it sure does rhyme sometimes. Between July and September, the speed of Brits’ wage growth hit a ten-year high. But in the three months to October, average weekly earnings were 3.3% higher than a year ago – growing faster still, and beyond economists’ predictions.
Fewer people are unemployed than the same time last year. This reduction in the number of chaps and chapesses looking for work has likely forced employers to offer more attractive packages to win over both jobseekers and those already in gainful employment. And let’s face it, “more attractive packages” is simply code for “higher pay”…
Why should I care?
For you personally: Wacky waving inflation-busting wage gap.
Wages rose by more than inflation – the rate at which the prices of goods and services increase – meaning the average UK worker should have a little extra left over at the end of the month (unless you spent it already 😉). And that little extra might get bigger in the coming months. Oil’s declining price is making it cheaper to produce and transport goods, which could lead to lower prices for buyers – good timing when the holidays are coming…
For markets: Interest-ing times.
Usually, when consumers get more money, they buy more stuff – and that higher demand can spur higher inflation. But recent interest rate increases might encourage people to save rather than spend, keeping a lid on prices for now. If they did start ticking up, the Bank of England might raise rates – but for the time being, it’s likely to wait and see what Brexit means for the UK economy. According to Bloomberg, investors think there’s a less than 60% chance the Bank increases rates next year.