UK Real Wages Growth 2026: Nominal +3.5% / Real +0.6-0.8%

The detail

ONS Average Weekly Earnings (AWE) data published on 15 September 2026 showed nominal regular pay growth of 3.5% in May to July 2026, relatively stable over the past five three-month periods after a year of slowing growth. Total earnings including bonuses grew 3.9%. Public sector regular pay grew 6.3% and private sector 2.9%, with ONS noting that the timing of public sector pay awards is affecting the comparison this year.

In real terms (adjusted using CPIH), regular pay grew 0.6% and total pay 0.9%. Using CPI, which excludes owner occupiers' housing costs, real growth was 0.8% for regular pay and 1.1% for total pay.

Real wages have been growing since mid-2023. On the ONS real total pay measure (CPIH-adjusted), annual growth turned positive in the three months to June 2023 and has stayed positive since. Before that it had been negative in every three-month period from the three months to May 2022, a stretch that included the 11.1% CPI inflation peak of October 2022. The recent gains are small: real growth of well under 1% leaves little headroom if inflation rises further, as the Bank of England expects.

For tax planning, slow real wage growth interacts with frozen thresholds. The £12,570 Personal Allowance and the £50,270 higher-rate threshold are fixed in cash terms, so any pay rise - even one that only keeps pace with inflation - pulls more income into tax (fiscal drag). HMRC projects 7.70 million higher-rate taxpayers in 2026-27, a 33.8% increase on 2023-24.