London Daily

Focus on the big picture.
Friday, Aug 01, 2025

Cost of living: Higher wage growth suggests another interest rate rise is on the way

Cost of living: Higher wage growth suggests another interest rate rise is on the way

Sky's Gurpreet Narwan explains why the Bank of England is likely to be concerned by the pace of wage increases revealed by official employment figures.
Wages are rising but everyone is unhappy.

That is because pay for workers is not rising quickly enough while policymakers are worried because pay is not slowing quickly enough.

It encapsulates the problems facing the UK economy.

While the government and the Bank of England are desperately trying to suppress inflation, workers are fighting to maintain their living standards.

Unfortunately, the Bank fears the two are incompatible. If workers get the pay rises they want it could further fuel inflation.

The latest official figures show nobody is getting what they want.

Wages, when the effects of bonuses are stripped out, rose by 6.6% in the three months to February, compared to the same period last year.

That was unchanged from the previous three-month period and considerably higher than the slowdown to 6.2% that economists were forecasting.

Total pay was up by 5.9% - rising from 5.7%.

Wage growth is proving too stubborn for the Bank, which wants to see signs of a slowdown before it cuts interest rates.

This shouldn't take too long now that unemployment is rising.

Samuel Tombs, an economist at Pantheon Macroeconomics, said the latest data had "raised the chances of the MPC hiking Bank Rate again next month; a further 25 basis point now looks like a toss-up," he wrote.

So, households and businesses could be hit with more interest rate rises at a time when society is getting poorer because wages continue to lag inflation.

The headline rate of inflation is currently at 10.4%.

It means that, when adjusted for inflation, real pay fell by 2.3% over the same period with public sector workers bearing the brunt of the slowdown.

This tension is at the heart of the industrial action sweeping the nation.

The country lost 348,000 days to strike action in February and, with living standards continuing to fall, the figure is only likely to rise.
Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
×