UK Wage Growth Slows Amid Global Economic Pressures

Wage growth in the UK has slowed down, adding to the pressure on households and complicating the Bank of England's interest rate decision this week. According to the Office for National Statistics (ONS), average total earnings, including bonuses, grew 3.9% in the three months to July, down from 4.1% in the previous period.

This figure is expected to set the increase in the state pension this year under the triple lock, which lifts the benefit by inflation, average wage growth, or 2.5%, whichever is highest. The jobs market is showing further signs of cooling, with the number of workers on company payrolls continuing to slip, dragged down by losses in retail and hospitality.

Liz McKeown, the ONS director of economic statistics, said vacancies remained at their lowest level outside the pandemic for more than a decade, with smaller firms blaming rising labour costs for hiring caution. The backdrop is a war in Iran that has pushed oil above $107 a barrel and driven up petrol and diesel prices.

The Bank meets on Thursday, with most investors expecting the base rate to stay at 3.75%, though some see a slim chance of a quarter-point rise to head off inflation. Official data on Wednesday is forecast to show inflation rose above 3% in August, well clear of the Bank's 2% target.