Annual growth in UK wages eased at the start of the year, undershooting expectations and adding to signs of a cooling labour market as policymakers weigh fresh inflation risks.
Regular pay, which excludes bonuses, rose 3.8% in the three months to January, according to the Office for National Statistics (ONS). Adjusted for inflation as measured by the consumer prices index, earnings were 0.5% higher over the same period.
The reading was below forecasts from economists polled by Reuters, who had expected growth of 4%.
Until recently, the Bank of England had been weighing whether persistent labour-market inflationary pressures or a recent softening in hiring posed the greater risk to the economy. However, a renewed rise in energy prices following the outbreak of war in the Middle East has added to concerns about price pressures.
Against this backdrop, the central bank is now widely expected to leave borrowing costs unchanged when it announces its latest decision at midday today, at the conclusion of its March monetary policy committee meeting. Expectations had shifted in recent weeks from an anticipated quarter-point rate cut.
Separate data showed the unemployment rate was unchanged at 5.2% in the three months to January, the statistics office said.
Commenting on today’s labour market figures, ONS director of economic statistics Liz McKeown said: “Labour market conditions were little changed at the start of the year. The number of workers on payroll rose slightly in the latest month but, overall, the recent picture has been broadly flat.
“Unemployment remains at the rate reported last month, up on the quarter and the year, while the number of vacancies remains largely stable, with declines among smaller firms being offset by rises among larger ones.
“Regular wage growth is at its lowest rate in more than five years, with pay growth in both the private and public sectors continuing to ease.”
Download the Yahoo Finance app, available for Apple and Android.