Average real wage in the UK - Data and Analysis (2001-2033)

Over the five years through 2026-27, average real wages are expected to rise at a compound annual rate of 0.3%, including a 0.2% rise in 2026-27, reaching £529.90 per week on average. A sharp fall at the start of the period has largely offset the gains made since. In 2022-23, average real wages declined as soaring energy bills pushed inflation well beyond nominal wage growth, with CPI inflation reaching a 41-year high of 11.1% in October 2022. Real wages returned to growth in 2023-24, as nominal pay rose at a record pace while inflation eased; in the three months to July 2023, wages rose faster than prices for the first time since October 2021. Successive increases in minimum and living wage floors continued to support earnings, with the National Living Wage rising by 6.7% in April 2025 and a further 4.1% to £12.71 per hour in April 2026. However, employer National Insurance rose from 13.8% to 15% and its secondary threshold fell to £5,000 a year in April 2025, raising the cost of employment, with many firms responding by accepting lower profits, raising prices and cutting staff hours. As a result, the labour market has loosened, with unemployment at 4.9% in the three months to July 2026, up from 4.7% a year earlier. Over the current year, growth in the UK's real average wage is expected to slow, with the real average wage forecast to reach £529.90 per week. While annual regular pay growth was 3.5% in May to July 2026, inflation is again eroding these gains. Conflict in the Middle East has driven up global energy prices, raising inflation and squeezing household spending power, with CPI inflation rising to 3.1% in August 2026, largely due to higher motor fuel prices. The Bank of England expects inflation to climb to around 3.75% in the fourth quarter of 2026 and slightly above 4% in the first quarter of 2027, while private sector regular wage growth has eased to 2.9% from 3.3% at the start of 2026.