Growth in regular pay excluding bonuses grew by 7.3% in March to May 2023, latest figures from the Office for National Statistics show. However, when adjusted for inflation, pay actually fell by 0.8% during this period.

Similarly, real pay fell by 1.3% in February to April, 2% in January to March and 2.3% in December to February.

However, with nominal wages growing at their highest pace on record outside the pandemic, the news has fueled fresh inflation fears.

Indeed, in a recent survey by the British Chambers of Commerce, 68% of businesses cited labour costs as the biggest driver of price rises.

Bank of England governor Andrew Bailey and Chancellor Jeremy Hunt both called for wage restraint on Monday, saying that high pay settlements were damaging the fight against inflation.

The Bank has raised interest rates 13 times in a row in an attempt to reduce the rate of inflation, hoping to ‘cool' the UK economy.

However, director general of the British Chambers of Commerce, Shevaun Haviland, warned against pushing "too hard" on interest rates as "there is a real danger that the long-term outlook for economic growth and prosperity will be dented".

Talk to us about your business costs.