Private Sector Pay Growth Hits Six-Year Low Ahead of BoE Rate Decision

The Bank of England's upcoming rate decision on Thursday has taken on added significance following news that private sector pay growth has hit its lowest level in nearly six years.

The Office for National Statistics reported that regular pay grew by just 2.9% in the three months to July, down from 3.1% in the previous quarter and marking the weakest annual rate since August-October 2020.

This is a concern for the Bank of England's Monetary Policy Committee (MPC), which uses private sector wage growth as an early indicator of second-round effects - where pay settlements and price-setting reinforce each other.

Liz McKeown, director of economic statistics at the ONS, noted that public sector figures are affected by the timing of NHS pay awards this year, but described the labour market as broadly stable with employment and unemployment largely unchanged.