The pace of wage growth has caught up with rocketing prices for the first time in nearly two years, but experts are calling for this boost to be shared throughout the economy.
The latest employment data from the Office for National Statistics (ONS) showed that wages, excluding bonuses, were up 7.8%, while July’s inflation rate eased to 6.8%. This means that prices have risen by 6.8% compared to the same month a year ago, but wages have increased by 7.8%.
“This means people’s real pay is no longer falling,” said Darren Morgan, director of economic statistics at the ONS.
The figures have been reported as a welcome reprieve for stretched family budgets, however for people receiving benefits, the boost may be short-lived.
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While earnings are growing at a record pace, this “short-term pay boost” could end up benefiting pensioners more than workers, warns Hannah Slaughter, senior economist at the Resolution Foundation.
Under the triple lock, pensioners receive an annual pay increase tied to whichever is higher; CPI inflation, average earnings or 2.5%. Therefore, record wage growth is set to deliver a big permanent boost to the state pension next April.