Hamilton Crawford - UK wage growth lags inflation even as jobless rate hits new low

Top Quote Hamilton Crawford - Wage growth lagging behind inflation is unlikely to deter BoE from increasing borrowing costs. End Quote
  • (1888PressRelease) April 26, 2018 - Hamilton Crawford says UK workers are still not seeing their salaries increase faster than inflation even though unemployment has fallen to its lowest in more than 4 decades.

    Hamilton Crawford economists say weaker than anticipated wage growth would probably not deter the Bank of England from hiking interest rates in May. This will be only the second interest rate increase since the start of the financial crisis almost ten years ago.

    Data showing that wage growth had not changed in the three months to February from the three months before caused the pound to weaken. Hamilton Crawford economists say inflation over the period was around 2.9 percent.

    Hamilton Crawford economists say the data indicates the labor market is still tightening.

    The Office for National Statistics reported that the rate of unemployment dropped to its lowest rate since 1975.

    Hamilton Crawford economists say central banks in many developed countries are baffled by the lack of wage growth in relation to decreasing unemployment, a trend which may be linked to increased use of technology by businesses and an increase in the amount of insecure jobs.

    UK households have been under tremendous pressure due to lagging wage growth and elevated inflation, mostly caused by the devaluation of the pound after the Brexit referendum in June 2016.

    However, the Bank of England has said that it anticipates wage growth will accelerate as the rate of unemployment falls and Hamilton Crawford economists believe the BoE is likely to hike interest rates faster than initially anticipated.

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