Britain’s strengthening economy is laying the way for the return of real wage growth this year, economists said on Tuesday.
The optimistic news came after new data from the Office for National Statistics (ONS) showed inflation dipped below 2% for the first time in more than four years.
Kathleen Brooks, research director at Forex.com told the Telegraph:
“Fairly robust growth combined with low price pressures is considered the Goldilocks scenario for an economy: not too hot, not too cold.
This description hasn’t been used to describe the UK’s economy since well before the financial crisis, which is suggestive of the UK economy’s return to growth.”
Worker’s pay is currently still low but economists hope this will change and wages will continue to grow throughout the year. The fall in inflation has also taken pressure off the Bank of England’s Monetary Policy Committee to begin hiking interest rates.
Chris Williamson, chief economist at Markit, said survey data suggested wage growth was starting to pick up. He said:
“Average salaries should start to rise at a stronger pace as we move through 2014 and, if inflation remains under control, a return to real wages growth is likely by the second half of the year.”