Pay grows at slowest rate in more than five years

Pay has grown at its slowest rate in more than five years, according to the latest official figures.

Annual earnings - excluding bonuses - grew at an annual rate of 3.8% in the November to January period, down from the previous figure of 4.2%.

The unemployment rate remained unchanged at a near five-year high of 5.2%, the Office for National Statistics (ONS) said, but there was a rise in the number of workers on payrolls last month.

The number of vacancies remained "largely stable", the ONS said, with declines in openings at smaller firms being offset by rises among larger ones.

The latest figures come ahead of the latest decision on interest rates from Bank of England's Monetary Policy Committee (MPC), which is expected to keep the cost of borrowing unchanged.

Until the outbreak of the US-Israeli war with Iran there had been speculation the Bank might cut rates, but this is not expected now as the recent conflict has pushed up the price of fuel and some energy costs.

Despite the slowdown in pay growth from its previous figure of 4.2%, wages are still rising faster than the rate of price increases, with inflation currently standing at 3%.

The ONS said regular earnings growth was 5.9% for the public sector and 3.3% for the private sector.

Early estimates suggest the number of job vacancies dropped by 6,000 to 721,000 in the three months to February.

The number of payrolled employees in February 2026 was up by about 20,000 from the previous month, to 30.3 million.

Liz McKeown, director of economic statistics at the ONS, said: "Labour market conditions were little changed at the start of the year.

"The number of workers on payroll rose slightly in the latest month but, overall, the recent picture has been broadly flat."

Yael Selfin, chief economist at KPMG UK, said a cut in interest rates on Thursday was unlikely.

"Priorities have shifted, with MPC members set to turn their attention to the new upside risks to the inflation outlook," she said.

"This could see interest rates staying higher for longer, raising the prospect of a more pronounced loosening in the labour market over the coming months."

Even though inflation could be about to increase, she does not think this will lead to a surge in pay demands .

"Demand for labour is weak, which should curtail workers' bargaining power and limit the scope for a pick-up in wage growth."