The pay of British workers grew faster than inflation again in November, official data showed yesterday, giving Prime Minister David Cameron a boost ahead of national elections in May.
Average weekly earnings, excluding bonuses, rose 1.7 per cent in November compared with the same month last year.
That was slower than growth of 1.9 per cent in October but it was the third month in a row that earnings by that measure rose faster than inflation after lagging for five years.
Inflation, as measured by the consumer price index, stood at one per cent in November and then fell to 0.5 per cent in December as global oil prices tumbled further.
The Office for National Statistics also said yesterday that the UK’s unemployment rate fell to 5.8 per cent, its lowest level in more than six years and below a forecast of 5.9 per cent in a Reuters poll.
However, there were signs of slowing in the UK’s fast pace of job creation.
Pay has picked up recently, though in real terms it is still well below its levels before the financial crisis.
The recovery could pose a challenge to the opposition Labour party which has focused its election campaign on what Labour calls the UK’s cost-of-living crisis.
However, it remains to be seen if voters give much credit to the government for the recovery in their spending power which has been helped further by the plunge in international oil prices.
The UK’s official budget forecasters have said they expect real earnings to return to their 2009-2010 levels only in 2018-2019.
The Bank of England is also keeping a close eye on wages as it considers when to start raising interest rates. Governor Mark Carney said this month that the BoE could keep interest rates low for longer in response to very low inflation.
The ONS said yesterday that pay, including bonuses, rose 1.8 per cent in the month of November, again weaker than growth of two per cent in October.
The ONS said the number of people in employment rose by 37,000 to 30.8 million in the three months through November.
That was the slowest growth in employment since the March-May period of 2013, just before the UK’s economy started to recover strongly from the after-effects of the financial crisis.
A fall of 58,000 unemployed people was the smallest decline since the three months to September 2013.
The number of people claiming unemployment benefit in the month of December fell by 29,700, more than economists forecasts of a fall of 25,000, compared with a revised fall of 29,600 in November.