Market Analysis

The value of pay deals handed out by British employers edged higher in the three months to May, as shown in a survey released on Wednesday. This highlights the persistent challenge of cooling pay growth, a significant contributor to inflation pressure.

According to the human resources data provider Brightmine, median basic pay settlements increased by 4.6% in the three months to May compared to the same period last year. This marks a slight uptick from 4.5% in the three months to April, which was revised down from an initial 4.9%.

The Bank of England (BoE) has been closely monitoring pay data in anticipation of Thursday's interest rate decision for June. Most BoE policymakers are looking for annual wage growth to return to the 3-4% range before considering rate cuts, a drop from the current rate of 6%.

"As we progress further into the year, we observe that settlement levels are consistently below 5%, and we expect them to remain there through the end of the year," said Sheila Attwood, senior content manager at Brightmine.

"Employers have responded to lower inflation by reducing the level of settlements compared to last year, yet they are still ensuring pay rises remain comfortably above inflation as employees continue to face cost of living pressures."

An April BoE survey indicated that employers expect pay growth to be 4.6% over the coming year.

The Brightmine survey included 132 pay settlements from March 1 to May 30, covering over 533,579 employees.

Paraphrasing text from "Reuters" all rights reserved by the original author.