UK Private Sector Wage Growth Falls to Lowest Since October 2020, Complicating Bank of England Rate Path

Private sector wage growth in the UK has fallen to its lowest level in nearly six years, according to data published by the Office for National Statistics (ONS) on 15 September 2026. The ONS found that private sector wages grew by just 2.9 per cent in the three months to July, down sharply from the 6.3 per cent recorded for the public sector in the same period and below the 6.1 per cent public sector figure for the quarter to June. The last time private sector wage growth was lower was October 2020, when the rate stood at 2.4 per cent. Overall average earnings excluding bonuses rose 3.5 per cent, in line with economist expectations; including bonuses, earnings grew 3.9 per cent. The ONS noted that public sector figures continue to be distorted by the timing of NHS pay awards. Bank of England officials closely monitor private sector wage data as an indicator of second-round inflationary effects, the risk that rising pay pushes up consumer prices. The data lands against a backdrop described as a "mixed picture": a surprise July growth spurt on one side, macro uncertainty and rising energy costs on the other.