Pay rise for millions as wages rise again and inflation falls – what that means for your money

Wages continue to rise for millions of workers as their earnings outpace inflation, at the fastest rate in two years.

Official figures released today by the Office for National Statistics (ONS) show that regular pay, excluding bonuses, was 7.7% in the three months to September this year.

Wages continue to rise for millions of workers across the UK


Wages continue to rise for millions of workers across the UKPhoto credit: PA

This was down from the previous three months and a record high of 7.9%.

But taking inflation, which measures how much prices rise, into account, wages rose 1% – the highest increase in real wages since the three months to September 2021.

A wage increase is good news for millions of workers who have battled high inflation in recent months.

Inflation is easing and remains at 6.7% in September – the same level as in August.

Official figures for October will be released on Wednesday and the figure is expected to fall below 5% for the first time in two years.

Commenting on today’s figures, Darren Morgan, director of economic statistics at the ONS, said: “As inflation eased in the last quarter, real wages are now growing at their fastest pace in two years.”

When wages rise less than inflation, income falls, making people worse off.

Inflation is a measure of how much goods and services are worth over a given period of time.

But now wages are rising faster than prices for the first time since September 2021, easing pressure on vulnerable households.

Meanwhile, today’s figures also show that average total salary, including bonuses, rose by 7.9% from July to September.

This overall annual growth rate is influenced by one-off public service payments made in these months.

Chancellor Jeremy Hunt said: “It is encouraging to see inflation falling and real wages rising, keeping more money in people’s pockets.”

“Building on the labor market reforms in the spring, I will set out my plans in the autumn statement to get people back to work and deliver growth in the UK.”

What it means for your money

A wage increase is good news for millions of workers who have battled high inflation in recent months.

Alice Haine, personal finance analyst at Bestinvest, said: “Increasing real wages technically leads to an increase in workers’ living standards as it means the money they earn can last longer. However, it is important to note that the increase is average. This does not mean that the living situation is decreasing for everyone.”

While high wage growth can ease pressure on households, it risks fueling inflation if companies pass these costs on to customers through increases in the prices of goods and services.

This would put additional pressure on household budgets at a time when energy prices are threatened by geopolitical tensions and rising demand as colder weather sets in.

Alice added: “When the October figures are released on Wednesday, headline inflation is expected to fall below 5% for the first time in two years – a boost for Prime Minister Rishi Sunak, who promised in January to halve inflation by the end of that Year.”

Rising wages have previously been blamed by Bank of England bosses for keeping inflation high.

The bank’s Monetary Policy Committee (MPC) kept the key interest rate at 0.25 percentage points to 5.25% earlier this month.

This was the second consecutive time the bank decided to maintain the base rate, easing pressure on homeowners facing rising mortgage rates.

Major banks use the BoE base rate to determine the interest rates they offer to their customers.

An increase means the cost of borrowing, including loans, credit cards and mortgage repayments, will become more expensive.

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John Verrall

John Verrall is a Nytimas U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. John Verrall joined Nytimas in 2023 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with me by emailing:

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