© Reuters. FILE PHOTO: A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. REUTERS/Maja Smiejkowska/File Photo
LONDON (Reuters) – Pay deals awarded by British employers lost more of their inflationary heat, according to data published on Wednesday, a day before the Bank of England announces whether it is raising borrowing costs again to rein in price growth.
Increases in basic pay deals fell to a median 5% in the three months to the end of August compared with the same period in 2022, human resources data provider XpertHR said.
That represented a slowdown from a rise of 5.4% in the three months to July which was the first fall in 2023.
“This month’s data reinforces the XpertHR view that we have reached the peak of higher pay awards, ” Sheila Attwood, XpertHR’s senior content manager, said.
“For the remainder of the year we can expect settlements and increases in pay to slowly begin to fall.”
Pay awards across the economy as measured by XpertHR hit levels not seen in three decades earlier this year.
After a wave of pay disputes that led to bigger than usual increases for state workers, public sector pay deals in the three months to August were the strongest since 1992 at 6.4%.
However, pay awards were still below consumer price inflation. Economists polled by Reuters expect data due to be published at 0600 GMT on Wednesday to show that inflation picked up in August to 7.0% from July’s 6.8% before falling again.
The BoE is watching pay growth as it tries to gauge how much further it needs to increase interest rates to squeeze inflation pressures out of the economy. It is expected to raise Bank Rate to 5.5% from 5.25% on Thursday in what would be its 15th but possibly final rate hike of the current monetary policy cycle.
XpertHR said its data covered 61 pay awards, covering more than 600,000 employees.