Wages outpace inflation to rise at fastest rate since 2008

Pay is rising at the fastest rate for a decade, official figures showed on Tuesday.

The Office for National Statistics’ latest labour market data showed average pay in the quarter to September up 3.2% on a year earlier — the best since December 2008.

The figures are ahead of the 2.4% inflation rate recorded in September, giving workers a real-terms pay rise.

The information will be closely monitored, however, by Bank of England rate-setters watching for signs that wage settlements could run out of control.

The rise comes despite a slight increase in unemployment to 4.1%, underlining the tightness of the jobs market.

Tej Parikh, senior economist at the Institute of Directors, said: “With pay packets finally picking up, households and retailers will have something to cheer about as we reach the festive period.

“Meanwhile, businesses are continuing to show resilience by opening up positions and pushing for new hires.

“However, we’re unlikely to be entering a ‘new dawn’ for persistent wage growth just yet, as firms are facing ongoing struggles investing in their productivity.”