Key facts
- UK annual wage growth, excluding bonuses, was 3.5% in the second quarter.
- This figure exceeded the 3.4% expected by economists polled by Reuters.
- The Bank of England is monitoring wage growth for potential long-term inflation pressures.
- Financial markets are pricing in a 0.25 percentage-point interest rate hike by the end of 2026.
British annual wage growth, excluding bonuses, increased to 3.5% in the second quarter, surpassing economists' expectations of 3.4%. This data from the Office for National Statistics is a key indicator for the Bank of England as it assesses potential long-term inflation pressures, particularly in light of recent energy price increases.
Financial markets are reflecting this economic outlook, with pricing indicating a 0.25 percentage-point interest rate hike by the end of 2026. The average wage growth in the UK, excluding bonuses, has historically ranged from a low of -0.20% in June 2020 to a high of 7.90% in August 2023. Projections suggest a decrease to 2.90% by the end of the current quarter, with further moderation to 2.30% in 2027 and 2.20% in 2028.