Higher interest rates from the Bank of England have moved a decisive step closer after the latest official figures showed earnings growing at their fastest rate in more than two years.
The latest snapshot of the labour market from the Office for National Statistics showed that a record high level of employment and a drift from part-time to full-time work pushed up wages in the three months ending in January.
With inflation falling, the ONS said the squeeze on living standards that had dampened consumer spending over the past year had come to an end if bonuses were included in the yardstick used to calculate earnings.
Esther McVey, the work and pensions secretary, said: “Getting a job means securing an income for a family and the chance to build a better future. That’s why up and down the country we are doing all we can to help people into work.”
But the TUC warned the squeeze on living standards was not over. The trade union body’s general secretary, Frances O’Grady, said: “It’s nine years since the recession ended, but wages are still falling and workers’ living standards are worse than a decade ago.
“The great pay squeeze is a long-term crisis. We need major changes to get the economy working again for working people.”
The ONS said that including bonuses, average earnings in the three months to January were 2.8% higher than in the same quarter a year earlier, the highest since September 2015. Excluding bonuses, earnings were 2.6% higher.