Workers are receiving the biggest pay increases since the end of 2008 according to the latest data from the Office for National Statistics (ONS).
Wage growth excluding bonuses for the three months to September is now 3.2%, or 3% including bonuses.
This exceeds the acceleration seen in October of 3.1%, suggesting pay growth is on an upward trend.
Inflation figures released on 14 November show that wage growth is now comfortably exceeding price rises. The latest CPI inflation (for September) is 2.4%, no change from the previous month.
Laura Suter, personal finance analyst at investment platform AJ Bell, comments: “The past few years have seen British workers pummelled by a combination of higher inflation and very sluggish wage growth, meaning they have often faced a real terms wage cut.
“However, the current low unemployment, which stands at 4.1%, appears to have shifted the odds back into workers’ favour, and we’re starting to see wages rise more meaningfully.
Pawel Adrjan, UK economist at the job site Indeed, adds: “Thousands of employers are knocking their heads against the ceiling of full employment - and many are being forced to ramp up wages in order to prise recruits away from their current jobs.
“Despite the modest increase in the unemployment rate, thousands of jobs are going unfilled and the number of unemployed people per vacancy remains at a record low of 1.6.”
Helen Morrissey, pension specialist at Royal London adds: “Today’s statistics show that while there has been a slight decline in the number of people aged between 16 and 64 in work, the number of people aged over 65 who are still in work continues to grow.
"While this may be partly due to people not having saved enough for retirement it is also an indicator of a more flexible working market where people can continue to work for longer if they want to and this should be welcomed.”
Handy wage growth calculator
The ONS has developed this handy tool below that measures your earnings against inflation to see how much your pay packet is growing (or falling) by.
The tool is based on September 2018 CPIH figures released on 17 October 2018 and September 2018 growth in earnings figures released on 13 November 2018. See What is CPIH? for an explanation of how CPIH differs from CPI - the consumer pirces index measure of inflation.