MNI DATA BRIEF: UK Pay Growth Tops 8%; Dilemma for Sunak

UK total wages surged by an annual rate of 8.8% in the second quarter, well above the Bank of England's forecast of 8.6%. Excluding bonuses, pay growth jumped by 7.4%, topping the 6.6% pace in the three months to May. Bonuses soared by 41.1% in the second quarter and by 45.4% in the month of May.

Accelerating wage growth presents a fiscal conundrum for the chancellor, Rishi Sunak, who is bound to the triple lock, which lifts pensions by the highest of inflation, wage growth or 2.5%. The reference period for the triple lock is the three months to July, but that period will include the elevated June rate reported on Tuesday.

The ONS has attempted to adjust earnings for base and compositional effects, but their estimate is wide. Underlying regular earnings stand between 3.5% and 4.9%, while underlying total earnings range from 4.9%-6.3%. Real regular earnings rose by an annual rate of 6.6% in Q2, while real regular earnings rise by 5.2%