Posted on Wednesday 12 November 2014 by Ulster Business

Wage growth beats inflation

Workers in the UK should have slightly more spare cash after wages grew by more than the rate of inflation for the first time since 2009, according to latest statistics.

The consumer price index was pegged at 1.2% in September, according to the Office of National Statistics while wages grew by 1.3%.

While only a fractional gain, the first sign of a let up on the continual squeeze in consumers’ disposable income will come as a welcome relief for retailers and other businesses.

In addition, the inflation rate is expected to remain well below the Bank of England’s 2% target for the coming months as a result of considerable spare capacity in the UK’s businesses and could fall below 1%.

The November inflation report released by the central bank also signalled that interest rates will remain on hold for a number of months, calming fears a hike from the current historical low level of 0.5% was on the way in early 2015.

Capital Economics said it expected the interest rate to hold at only 1%  by the end of next year and 1.5% in two years time.

“The likely weakness of inflation, high debts levels and an intense fiscal squeeze look set to mean that interest rates rise very gradually by historical standards,” Samuel Tombs, Senior UK Economist at Capital Economics said.


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