High inflation continues to stifle wage growth

Main points

• Growth in Average Weekly Earnings including bonuses (AWE) was 4.3 per cent in the 3 months to December 2021, stronger than the 3.8 per cent that we predicted in January.
• We now forecast private-sector AWE to decrease from 4.6 per cent in the 3 months to December 2021 to 4.3 per cent in the first quarter of 2022.
• With the current policy of moderation in public-sector pay, we forecast public-sector AWE growth to be stable between 2½ and 3 per cent until the first quarter of 2022.

"Wages in the UK picked up in January, largely driven by record high vacancies, but still lag behind inflation. With consumer price inflation rising to a near 30-year high of 5.4 per cent in December and expected to reach 7 per cent over the coming months, workers can expect a real squeeze on their income."

Dr Kemar Whyte

Senior Economist, NIESR

See our previous wage tracker to follow the analysis