WAGE RISES SLOW – Pay has increased faster than the overall rate of price rises

WAGE RISES SLOW – Pay has increased faster than the overall rate of price rises

Wage rises have slowed, official figures show, potentially signalling good news for those hoping for a fall in the cost of borrowing.But pay has increased faster than the overall rate of price rises.

Earnings rose at an annual rate of 5.7% in the three months to May, data from the Office for National Statistics (ONS) showed.

In the same month, inflation stood at 2%. Because of reduced inflation and pay rises remaining high, the ONS said real wages – which adjust for inflation – grew at the fastest rate in nearly three years, 3.2%.

The figures are in line with economists and Bank of England forecasts so could help rate-setters at the Bank decide to cut in August.

Acting to keep the interest rate the same, however, is inflation data released on Wednesday which showed stubbornly high prices in parts of the economy.

The next decision is too close to call, though a cut is more likely after the latest ONS figures.