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Chart of the day: Pay is up!

Wages have risen above inflation for the first time since the financial crisis. Could this mean higher interest rates?

150218-wages-chart

<i>Wages have risen above inflation for the first time since the financial crisis.Source: ONS</i>

What happened?

said the Financial Times

Inflation is at its lowest level for at least nine years (and probably much longer), and Britons' spending power is increasing. The latest figures suggest the first rise in real wages since before the financial crisis.

So what does this mean?

Bank of England governor Mark Carney reckons

What's next?

According to Capital Economics

We might just see a shift in the Bank of England's interest rate policy, too. The bank's Monetary Policy Committee (MPC) voted unanimously to keep interest rates at historic lows of 0.5% as little as two weeks ago.

After this report, however, they might start to consider changing their tune; after all, rising pay is the best indicator of rising interest rates. It's a long-shot, but certainly likelier than it was last week. Watch this space.

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