UK pay increased ahead of National Minimum Wage 2025 hike

UK pay growth increased after a recent public sector pay hike, as the Office for National Statistics (ONS) said average weekly pay grew by 5.9% for the three months to February.

This was the same as the previous quarter, which had been the highest level since April last year.

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Meanwhile, pay growth, including bonuses, was 5.6% for the period, in line with market expectations.

Wages outstripped inflation by around 3% once inflation is taken into account, with this 2.8% above inflation, including bonuses.

Surprisingly, inflation dipped to 2.8% in February after the prices of clothes and shoes fell for the first time in more than three years.

Elevated levels of wage growth will be considered by Bank of England officials when they vote on whether to reduce interest rates from their current level, 4.5%, at their meeting next month.

It came as the UK unemployment rate remained at 4.4%, according to the data.

ONS director of economic statistics Liz McKeown said: “Regular pay growth remains strong having increased slightly in the latest period.

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“Growth accelerated in the public sector as previous pay rises fully fed through to our headline figures, while pay in the private sector was little changed."

Monica George Michail, NIESR associate economist, said: “The recent rise in the national minimum/living wage in April is expected to keep earnings growth elevated in the short run.

“However, with high uncertainty around the economic outlook and slowing hiring activity, wage pressures are expected to ease gradually.”