Economists said the wage pressure reinforced the view that the Bank of England would wait until after the election before cutting interest rates from their current 16-year high of 5.25pc.
The Bank’s Monetary Policy Committee, led by Andrew Bailey, meets next week to decide on whether to reduce borrowing costs.
Jake Finney, an economist at PwC UK, said the latest ONS labour market data “presents a headache for the Bank of England”, while Simon French, of Panmure Gordon, said wage growth remains “too hot” to reduce borrowing costs.
Thomas Pugh, economist at RSM, added: “Strong pay growth will give the hawks on the committee some ammunition and the combination of sticky inflation and the election means there is almost no chance of a rate cut next week.
“In our opinion an August rate cut is the right move.”
Liz Kendall, Labour’s shadow work and pensions secretary, accused the Conservatives on Tuesday of an “abject failure” to address the worklessness crisis.
Ms Kendall said: “On Rishi Sunak’s watch, a record number of people are out of work due to long-term sickness at terrible cost to them, to business and the taxpayer, and we remain the only G7 country whose employment rate still isn’t back to pre-pandemic levels.”
The Conservative manifesto, launched on Tuesday, said the party wished to “tighten up how the benefits system assesses capability for work.”
“We will change the assessments from September 2025 so that those with more moderate mental health issues or mobility problems who could potentially engage with the world of work are given tailored support, instead of being written off on benefits,” it said.
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