Exact rate wages are rising revealed and what it means for your money – including pay rise and interest rate cuts
WAGES have risen for millions of workers new figures reveal.
Growth in regular pay, excluding bonuses, was 6% in the three months to February this year.
That's according to official figures released today by the Office for National Statistics (ONS).
Taking into account inflation, annual total pay rose by 1.6% (including bonuses).
That was down from 6.1% for the three months to January this year.
If pay rises by less than inflation it squeezes incomes, as it means people's pay in real terms is worse off.
Inflation is a measure of how much the price of goods and services is rising compared to the same period last year and currently stands at 3.4%.
Vacancies fell by 13,000 quarter on quarter in the three March to 916,000.
The rate of UK unemployment rose to 4.2% in the three months to February from 3.9% in the previous three months.
Director of Economics at ONS Liz McKeown said: "Recent trends of falling vacancy numbers and slowing earnings growth have continued this month albeit at a reduced pace.
"But with the rate of inflation slowing, real earnings growth has increased and is now at its highest rate in nearly two and a half years."
"At the same time, we are now seeing tentative signs that the jobs Market is beginning to cool, with both a fall in the headline employment rate from our survey and a drop in the total number of people on payrolls from HMRC data."
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager, comments: “
“The good news is that the UK already appears to be edging out of the technical recession it entered in the second half of last year with positive economic growth in January and February raising the likelihood of an expansion in the first quarter of 2024.
"For workers, salary rises may seem more muted as employers rein in costs to protect profits but the improving economic picture raises the likelihood that people will hang onto their jobs."
“With the recession already edging into the rearview mirror, some employers may prefer to retain existing staff rather than resort to redundancies to avoid recruitment struggles when the economy picks up again."
What it means for your money
Growing wages is good news, especially when it's higher than the rate of inflation.
It means households have more purchasing power and a lot of that money will go back into the economy.
But rising wages have previously been blamed for keeping inflation high by Bank of England bosses.
Wage growth can also sometimes spike inflation and that burden is passed back on to households with businesses increasing the price of goods and services.
The Bank of England may decide to hike its basic rate which will affect borrowing.
A hike means the cost of borrowing, including loans, credit cards and mortgage repayments rise.
The news comes just days after the National Minimum and National Living wages rose for millions across the UK.
This meant some people would be better off by £1,800 a year.
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The minimum hourly rate for over 21s rose from £10.42 to £11.44 on April 1.
It gives an almost 10% cash boost to nearly three million workers who receive the national living wage and have seen their pay hit by inflation.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we're earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
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