LONDON • UK wage growth accelerated over the summer amid the lowest jobless rate in more than four decades.

Earnings excluding bonuses rose an annual 2.9% in the three months through July, more than the 2.8% economists forecast. In July alone, basic wages rose 3.1%, the most since 2015, and vacancies are at record levels, the Office for National Statistics said yesterday.

A tightening labour market prompted the Bank of England (BoE) to increase interest rates last month to their highest level since 2009. In the private sector, three-month pay growth climbed to 3%.

Muted productivity means that even a modest wage pickup could fuel inflation as companies raise prices to protect their margins. The pound was little changed at US$1.3037 (RM5.41) as of 9:51am in London yesterday.

Wages are now growing faster than prices in a boon for households squeezed by years of meager pay rises and, more recently, a pound-induced inflation surge. Real wages remain below their levels before the financial crisis. The jobless rate is held at 4%, the lowest since 1975.

Overall wage growth quickened to 2.6% between May and July and the BoE sees a pickup toward 3.5% next year. — Bloomberg