UK wage growth could rise to three-year high with inflation remaining steady

UK wage growth could hit a three-year high of three per cent when data for the three months to September is revealed tomorrow, according to City economists.

Average weekly earnings could reach the three per cent growth mark – from 2.7 per cent in the previous quarter – while excluding bonuses it could rise 3.2 per cent, up from 3.1 per cent in the three months to August, economists have predicted.

Inflation is expected to remain steady at 2.4 per cent after an unexpected dip in September.

David Madden, analyst at CMC Markets, said it would give the economy a welcome boost and point towards a tightening of monetary policy.

He said: “Rising wage growth and falling inflation is a double win for the British worker, and equates to a 'real' increase in wages.

“When workers earn more they tend to spend more, and this should help the British economy tick along.”

Daiwa Capital Markets predicted the three-year high, as did Capital Daily economists.

Both also expected the unemployment rate to remain at the multi-decade low of four per cent.

Daiwa's research said: “This report is likely to show that the period of subdued employment growth continued.

“The headline three month pace dropped to around zero in the last two months, and while we will probably see somewhat higher reading for September, it should be far from the triple-digit increases often seen in the first half of the year.

“The weaker employment growth should leave the headline unemployment rate unchanged at 4 per cent.”