Inflationary pay surge not as dramatic as feared

Despite fears that inflation would force wage increases, August’s labour market statistics reveal that growth in average earnings has fallen.

The August 2007 Labour Market Statistics from the Office for National Statistics, reveal that growth in average earnings, both including and excluding bonuses has fallen. Average earnings growth fell to 3.3% in the year to June, down from 3.5% in the year to May. This was the lowest figure since June 2003.

Excluding bonuses, wage growth slowed to 3.4%. John Philpott, chief economist at the Chartered Institute of Personnel and Development, said that there is little likelihood of renewed acceleration in pay rises despite the positive results on jobs and unemployment reported in the study. “The latest labour market figures are full of good news for policy makers – more people in work, fewer jobless, and a pay scene that poses little threat to efforts to contain price inflation,” he added.