UK Wage Growth Holds Steady, Public Sector Leads

UK wage growth held steady in the three months to June 2025, with regular pay excluding bonuses rising 5 percent year-on-year to £679 per week, according to data from the Office for National Statistics (ONS). The pace matched the previous period and market expectations, remaining at the slowest rate in nearly three years.

The stability in pay growth comes as policymakers closely monitor labour market conditions for signs of persistent inflationary pressures.

Public Sector Outpaces Private Pay

Public sector pay growth accelerated to 5.7 percent from 5.5 percent, the fastest increase since the three months to February. Private sector wage growth edged down to 4.8 percent from 4.9 percent.

Among industries, wholesale, retail, hotels, and restaurants recorded the largest annual increase at 6.8 percent, followed by services at 5.0 percent, manufacturing at 4.6 percent, construction at 4.2 percent, and finance and business services at 3.1 percent. The data reflects stronger pay pressures in consumer-facing sectors.

Real Wage Growth Weakens

Adjusted for inflation, real wages rose 0.9 percent over the period, marking the weakest growth since the three months to July 2023. Analysts suggest that while higher public sector pay could boost consumption in the near term, the moderation in overall wage growth may reduce pressure on the Bank of England to keep monetary policy restrictive for an extended period.

Source: UK Office for National Statistics