Total pay for employees in Great Britain, including bonuses, increased by 0.1% in real terms between February to April 2017 and February to April 2018, according to research by the Office for National Statistics (ONS).
Its UK labour market: June 2018 report also found that regular pay, excluding bonus payments, increased by 0.4% in real terms, which here means that it has been adjusted for consumer price inflation, between February to April 2017 and February to April 2018.
In nominal terms, meaning that it has not been adjusted for consumer price inflation, total pay increased by 2.5% between February to April 2017 and February to April 2018. This compares to a 2.6% recorded growth rate between January to March 2017 and January to March 2018.
Regular pay, in nominal terms, increased by 2.8% between February to April 2017 and February to April 2018. This is lower than the 2.9% growth rate recorded between January to March 2017 and January to March 2018.
Average total pay, including bonuses, was £516 a week in nominal terms before tax and other deduction from pay for employees in Great Britain in April 2018. This compares to £504 a week in April 2017. Average regular pay, excluding bonuses, was £484 a week for British employees in April 2018, before tax and other deductions from pay. This compares to £472 a week in April 2017.
In real terms, average total pay for employees in Great Britain was £490 a week in April 2018, before tax and other deductions from pay. Average regular pay in real terms, excluding bonus payments, was £459 a week in April 2018, before tax and other deductions from pay.
Average total pay for employees in Great Britain, in nominal terms, increased by 37.1% between January 2005 and April 2018, rising from £376 a week to £516 a week. Over the same time period, the Consumer Prices Index, including occupiers’ housing costs, increased by 34.7%.
Ben Brettell, senior economist at Hargreaves Lansdown, said: “Wage growth dipped unexpectedly in the three months to April, pouring cold water on hopes the Bank of England might raise interest rates at its August policy meeting.
“Pay grew by 2.8% excluding bonuses, and by 2.5% including bonuses compared with the same period a year earlier. Both numbers were lower than economists had expected. Meanwhile unemployment held steady at 4.2%, a multi-decade low, and the number of people in work grew by more than forecast. Figures due tomorrow are expected to show inflation ticking up slightly to 2.5%.
“The Bank views wage growth as a key indicator when considering whether to raise rates. Disappointing figures here, combined with confirmation that the economy grew by just 0.1% in Q1, should put paid to any talk of a summer rate rise. Policymakers had been thought to be considering raising rates in August, but I still think a rate rise this year looks unlikely. The Bank will almost certainly want confirmation that the Q1 growth figure was just a blip before raising borrowing costs.”