James Smith, Developed Markets Economist at ING, suggests that at 2.8%, the rate of regular pay growth is now more or less as high as it has been in the post-crisis years, barring a short period over the summer of 2015.
“This latest pick-up also means that wages are now rising ever so slightly faster than inflation – which on the face of it, implies that the household squeeze has come to an end. Although, with consumer confidence still relatively low, we don’t think the economy is out of the woods just yet.”
“It’s worth repeating that these wage figures are still being flattered by the sharp slowdown seen at the start of 2017. And while the recent momentum has undoubtedly been encouraging, it has slowed a touch over the past couple of readings (the 3M/3M annualised rate of growth has eased back to 2.6% from 3.1% previously).”
“Having said that all that, we suspect policymakers will remain fairly comfortable with wage growth.”
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