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News Update: Is UK Wage Inflation a Good Thing or Cause for Concern?

Prime Minister Boris Johnson announced recently to the BBC that wages were finally on the rise.

The Office for National Statistics backs the PM’s claim, stating that annual growth of wages sits between 3.6% and 5.1% from May to July. And the Bank of England (BoE) estimates that in the private sector, pay growth is about 4% higher than the pre-pandemic rate.


This does not constitute advice and advice should be sought in all instances before acting on it.


Across all different sectors, business leaders are reporting pay rises, often in the double digits, that would have been unheard of mere months ago. That is as well as the 3% pay rise for NHS staff including nurses, paramedics, consultants, dentists and salaried GPs, announced in July.

The Prime Minister also stated that there is a “period of adjustment” the nation needs to contend with before the economy bounces back completely, such as the labour shortages that have left some supermarket shelves empty and petrol stations dry.


These pay rises have not yet been fully realised.

Key sectors like heavy goods vehicle drivers are indeed reporting significant pay rises, but in other areas, small pay rises of around 1% are what is being reported.

Similarly, the BoE reports that there have been double digit increases for people with skills in short supply, but on average, most are only getting 2-3%, and for public sector workers dealing with government pay freezes, even that much might be off the table.


Higher wages may not beat the impact of inflation

The growth disparity might actually be a good thing – certainly for those with above-average wage gains in sectors with normally low pay and poor conditions. But for the majority, the wage gains have been modest. And with economic inflation to deal with, those pay rises might not even make much of a dent in overall increasing costs. It’s all well and good that wages are increasing, but with prices going up as well, more still needs to be done so the public can keep up.


Keep up to date

Are you uncertain about what impact wage increases and inflation will have on your finances? Be sure to keep up to date with all the latest financial news for doctors and dentists on our blog and get in touch with us to discuss your financial health today.


 

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