The prospect of a pre-election interest rate cut by the Bank of England has been damaged by official figures showing no progress in bringing down the pace of wage growth. Data from the Office for National Statistics showed basic pay rising at an annual rate of 6% in the three months to April. That was flat on the figure reported by the ONS for the past two months. Upwards pressure came from the government's 9.8% rise in the National Living Wage, which took effect in April.
The Bank has hinted that an interest rate cut is likely in the coming months but it remains worried about sticky services inflation and the pace of wage growth fuelling more price rises in the economy. Salary increases have outpaced the rate of inflation since last August, boosting consumer spending power on the face of it, but household budgets have remained squeezed.