Tomas Key
Nominal wage growth has increased markedly in the UK in recent years, reaching levels that haven’t been seen for more than 20 years. Although growth has moderated a little in recent months, it remains significantly above its pre-pandemic level. An assessment of whether this strong rate of wage growth will persist is a key input to the monetary policy decision, given the important link between the cost of labour and firms’ pricing decisions. In this post, I will outline a new measure of the trend – or underlying – rate of wage growth which is estimated using data from many different sectors of the economy and which can help with this assessment.
Continue reading “Using sectoral data to estimate the trend in aggregate wage growth”