Further cuts to base interest risk being pushed back after official data showed wages climbed by 5.4% over the three months to June, analysts say.
Though this was lower than the 5.7% growth recorded over the previous three months, Charles Stanley (LSE:CAY) analyst Rob Morgan warned the latest figure was still too high.
“Wage inflation is a key number to help the Bank of England assess how quickly it should cut interest rates as it’s a significant component of services sector prices,” he said.
“While goods inflation has been largely contained for the time being, services inflation continues to run hot, driven by higher wages.”
A second consecutive cut to base interest, after policymakers reduced the bank rate from 5.25% to 5.00% earlier this month, was unlikely as a result, Morgan noted.
This comes after Office for National Statistics data on Tuesday, which also showed a surprise drop in unemployment to 4.2%.
Some were more optimistic on the figures, with Capital Economics deputy chief Ruth Gregory noting the data was “a sign that labour market conditions are continuing to cool”.
She added the figures supported the group’s forecast for another two base rate cuts this year, following a pause in September.
Consumer price index data is now firmly in focus, analysts added, with inflation data for July due on Wednesday.
“The stickiness of wages data continues to be a source of discomfort and casts considerable doubt on near-term cuts,” Morgan added.
“We are very much in a holding pattern for rates for a few months as more data comes through.”