The Bank of England may come under further pressure to raise interest rates after revised data revealed labour costs are rising quicker than previously thought.
The Office for National Statistics (ONS) has admitted it made a mistake in calculating the growth in unit labour costs, which originally stood at 1.6% year-on-year in the three months to June, but was corrected to 2.4%.
The ONS said: “We have corrected this error. This was due to income data from the second estimate of GDP being used instead of data from quarterly national accounts.”
Growth in unit labour costs, which is the price paid by employers to produce a given amount of economic output, could signal momentum in UK wages and strength in the UK economy.
Economists have said the change in figures could be more supportive for the BoE to raise interest rates from 0.25% to 0.5% at the Monetary Policy Committee’s meeting next month.
The MPC said at the meeting in September the UK economy had been “slightly stronger than anticipated”, while pointing to August’s inflation figures beating expectations, rising to 2.9%, the highest level since 2012.
While BoE Governor Mark Carney said rising labour costs could lead to a rate hike, he said in June he was reluctant to tighten monetary policy due to “subdued” wages and labour costs, according to the Guardian.