(Reuters) – The value of pay deals handed out by British employers inched higher in the three months to May, according to a survey on Wednesday that underlined how pay growth – a major driver of inflation pressure – may be slow to cool.
Median basic pay settlements in the three months to May were 4.6% higher than a year earlier, up from 4.5% in the three months to April, which was downwardly revised from 4.9%, according to human resources data provider Brightmine.
The Bank of England has been watching pay data closely ahead of Thursday’s interest rate decision for June.
Before they cut interest rates, most BoE policymakers want to see signs that annual wage growth is heading back to the 3-4% range from the most recent rate of 6%.
“As we head further into the year, we can see that settlement levels are sitting firmly below 5%, a level we now expect them to sit at through to the end of the year,” Sheila Attwood, senior content manager at Brightmine, said.
“Employers have reacted to lower inflation by bringing down the level of settlements compared with last year, but are keeping pay rises comfortably above inflation while employees continue to feel cost of living pressures.”
A BoE survey conducted in April showed employers anticipate pay growth of 4.6% over the coming year.
The Brightmine survey was based on 132 pay settlements between March 1 and May 30, covering more than 533,579 employees.
(Reporting by Andy Bruce; editing by William James)
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