UK wages rise faster than inflation for first time in a year

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Wages grew faster than inflation for the first time in almost a year in February and the jobless rate fell to just 4.2 per cent according to the latest official data.

The Office for National Statistics reported that wages were up 2.8 per cent in the three months to February on a year earlier, higher than the 2.7 per cent rate of consumer price inflation over that period.

Real wages turned negative in April 2017 as inflation jumped due to the plunge in the pound in the wake of the Brexit vote.

“Wage growth has been the missing piece of the puzzle in Britain’s long, slow recovery from the financial crisis,” said Tom Stevenson of Fidelity International.

“With the final piece now in place the Bank of England now has the catalyst to be able to follow through on its plans to raise interest rates at the next MPC meeting in May and start the move back towards monetary normality.”

Meanwhile, the unemployment rate in February ticked down to 4.2 per cent, from 4.3 per cent previously, according to the ONS.

However, the wages data was weaker than the 3 per cent growth that many City of London analysts had anticipated, sending sterling down to $1.4338, as some traders pulled back their bets slightly on a May interest rate hike from the Bank of England.

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