Tomas Key
Nominal wage growth has increased markedly in the UK in recent years, reaching levels that haven’t been seen for more than 20 years. Although growth has moderated a little in recent months, it remains significantly above its pre-pandemic level. An assessment of whether this strong rate of wage growth will persist is a key input to the monetary policy decision, given the important link between the cost of labour and firms’ pricing decisions. In this post, I will outline a new measure of the trend – or underlying – rate of wage growth which is estimated using data from many different sectors of the economy and which can help with this assessment.
