The odds that the Bank of England (British Central Bank) will raise interest rates at its next meeting have increased, as wages in the United Kingdom continued to rise at a record pace, while inflation did not rise at a higher rate than wages for the first time in nearly two years, according to official statistics.
The unemployment rate in Britain rose to 4.3 percent in the three months until the end of last July, according to official data, while salary increases remained at a record level. The unemployment rate reached 4.2 percent at the end of the second quarter of this year, which ended last June.
The unemployment rate is already higher than the 4.1 percent the Bank of England expected for the third quarter as a whole when it published its last set of forecasts in early August. The data showed that employment also fell sharply.
On the other hand, average wages, excluding bonuses, increased by 7.8 percent on an annual basis in the period from May to July, the fastest pace of increase since these data began being recorded in 2001.
Total wages after incentives rose by 8.5 percent, meaning that wages exceeded inflation for the first time since March 2022, an increase of 0.6 percent when taking into account the consumer price index.
In this regard, Finance Minister Jeremy Hunt said: “Wage growth remains high, which partly reflects the disbursement of salaries to public sector workers in one lump sum.” He added: “But for real wages to grow sustainably, we must adhere to our plan to reduce inflation by half.”
Shortly after assuming office in October 2022, British Prime Minister Rishi Sunak pledged to reduce inflation by half after it had exceeded 10 percent at the time… but the inflation rate in the United Kingdom, at 6.8 percent, is still the highest among… G7 countries.
Economist Ashley Webb, at Capital Economics, noted that “labor market tightness continues to ease in July,” but he believes that “wage growth will only increase the Bank of England’s turmoil, and confirms our view that the bank will raise interest rates again.” , from 5.25 percent currently to 5.5 percent maximum,” during its next meeting.
The pound rose on Tuesday, after data showed British wages grew at a record pace again in July, which could increase pressure on the Bank of England to continue raising interest rates.
The pound sterling rose after the release of the data, but pared its gains and rose most recently by 0.06 percent to $1.2516, after trading at $1.2508 before the numbers were published.
2023-09-14 08:28:41
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