Latest figures released by the Office for National Statistics (ONS) indicate that average wages continue to grow at a faster rate than inflation. After adjusting for consumer price inflation (CPI), wages increased by 3.4% between October and December 2024 compared with the same period in 2023.

Unemployment figures also present an encouraging picture, with the UK’s unemployment rate holding steady at 4.4%. However, the ONS has cautioned that the response rate to its survey was low, meaning these figures may not fully reflect the true position.

What lies ahead in the coming months? With forthcoming increases to the national minimum wage and employers’ national insurance contributions, it is likely that pay growth will slow over the next few months. Many businesses have reported plans to reduce their workforce in response to these rising costs.

An increase in wages can also influence the Bank of England’s decisions regarding the base rate. When wages rise, disposable income in the economy increases, which can drive demand and push up prices. As a result, these figures may lead the Bank to proceed cautiously before implementing another rate cut.

If you need assistance in budgeting for increased wage costs from April or assessing how to adjust your pricing to accommodate these changes, please get in touch. We would be happy to support you in navigating these adjustments to ensure your business continues to grow and thrive.

See: https://www.bbc.co.uk/news/articles/c4gwgpjgl5zo