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15 May 2018

Pay squeeze ends as wage growth outstrips inflation for first time in over a year

Unemployment in the UK is now at its lowest level since 1975, as figures have shown average weekly earnings excluding bonuses rose by 2.9% in the first quarter of 2018. Over the same period, inflation was 2.7%.
 
James Andrews, Director – Head of Investment Management, said: “This means that we now have real wage growth for the first time in over a year, reducing the squeeze on household incomes.
 
“This is welcome news for the UK consumer and could provide some well-needed respite for retailers following a first quarter that saw nearly a fifth of FTSE General Retailers issue profit warnings.
 
“Whether this is sufficient to see an interest rate rise in the summer is still questionable given modest inflation and business investment levels. The key will perhaps be whether wage growth plus the upward pressure on oil prices, thanks to the US’ Iran sanctions, sees inflation rise materially away from the 2% target again.”
 
 
 
 
Pay squeeze ends as wage growth outstrips inflation for first time in over a year
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