Overview

• The wage price index rose 0.8% in the second quarter, keeping annual pay growth at 3.4%.
• Public-sector wages climbed 3.7% as backdated agreements took effect, outpacing a 3.4% rise in private-sector pay.
• Lower inflation of 2.1% in Q2 translated into higher real incomes, providing a boost to household spending.
• The unemployment rate edged up to 4.3% from 4.1%, signaling early signs of labour-market slack.
• Analysts at Citi forecast 25 basis-point rate cuts in September and November if joblessness climbs further, while swaps imply a 34% chance of a September cut with total easing of 58 basis points to a 3% terminal rate by mid-2026.