Kevin Brown, Savings Specialist at Scottish Friendly, reacts to this morning’s ONS labour market figures.

Wages still rising but gap is starting to narrow with inflation

“On the surface, ONS wage data continues to give UK households some reason for cheer. Pay rises are still climbing ahead of inflation, in a boost to household disposable income for many. Wages continue to defy the relatively gloomy prognosis for the UK economy, but the rate is slowing relative to inflation.

“The data does not yet capture the impact of either the National Insurance rises and living wage increase, which started in April, nor the drama created by US tariffs and their impact here in the UK. There are signs that wage growth will slow further from here. Business confidence is at its lowest level since the Covid pandemic. Private sector headcount growth has slowed to a snail’s pace, while headcount is expected to fall among public sector workers.

“Equally, ONS data shows household disposable income remains stagnant since 2008 as cost of living increases have continued to all but wipe out any pay rises. Against this backdrop, households are unlikely to be feeling much better off in spite of some decent wage hikes.

“Households will need to continue to make sure their money goes as far as possible, and that extends to nest eggs. Finding the right ‘home’ for the money they are putting aside for the long-term is crucial.”