28 August 2026
UK economy – Steady unemployment and wages but inflation up
The unemployment rate for the three months to June held steady at 4.9%, though NIESR forecast it will edge to 5.0% in the second half of the year. This is driven by a reluctance of corporates to take on the cost of additional staff, resulting is slower hiring and declining vacancy numbers.
Wage growth held steady at 3.5%, with tighter private sector wages offset by stronger public sector settlements. Private sector pay is forecast to fall from 2.8% to 2.5% in the third quarter, while public sector pay will remain around 5.0%.
The inflation tracker showed CPI inflation rising in July, from 2.6% to 2.9%. The main driver was the 13% increase in the Ofgem price cap for household energy. As a result, the Bank of England is expected to hold interest rates steady.
GDP growth was 0.3% in June and 0.4% for the quarter, with services growth offsetting declines in production and construction. NIESR has increased their forecast for quarter 2 to 0.4% and 0.2% in quarter three.
Read the latest GDP, Wage and Inflation trackers from NIESR.
Wage growth held steady at 3.5%, with tighter private sector wages offset by stronger public sector settlements. Private sector pay is forecast to fall from 2.8% to 2.5% in the third quarter, while public sector pay will remain around 5.0%.
The inflation tracker showed CPI inflation rising in July, from 2.6% to 2.9%. The main driver was the 13% increase in the Ofgem price cap for household energy. As a result, the Bank of England is expected to hold interest rates steady.
GDP growth was 0.3% in June and 0.4% for the quarter, with services growth offsetting declines in production and construction. NIESR has increased their forecast for quarter 2 to 0.4% and 0.2% in quarter three.
Read the latest GDP, Wage and Inflation trackers from NIESR.
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