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The latest data on the UK labour market was ambiguous. Employment was up, unemployment down, but wages are now rising at a pace which is only a fraction higher than inflation.

What matters when looking at wages, and the effect they will have on the economy, is how they compare with inflation. Real wages, that’s rises in average wages minus inflation, is what we need to focus on.

And the latest data revealed a kind of stay of execution.

Wages including bonuses, rose by 2.3 per cent in the three months to February. Without bonuses, they rose by 2.2 per cent. But take a look at the month in isolation, and they were up by 2.9 per cent. But this jump was due to what happened a year ago, when bonuses in the financial sector were exceptionally low. Wages ex bonuses rose by just 1.9 per cent.

Put that in context with UK inflation in February, which stood at 2.3 per cent.

We are not there yet, but with inflation on an upwards trajectory, and underling growth in wages flat, at best, it is only a matter of time before real wages start to fall. And when this happens, expect a knock-on effect on retail and maybe house prices.

Yet wages aside, the latest data on the UK labour market was good.

The employment rate rose 74.6 per cent, the joint highest level ever recorded, with data going back to 1971, and unemployment at 4.7 per cent was at its lowest level since 1975.

Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics said: "The small upside surprise from wages has boosted sterling. The continued weakness of core wage growth bolsters the view of the majority of MPC members that interest rates do not need to rise this year in order to combat inflation.”

Paul Hollingsworth UK Economist at Capital Economics said: "While the UK jobs recovery continued apace in February, underlying wage growth is struggling to keep pace with inflation and is another reason to think that household spending will slow this year."

On a more positive note, he added: "We doubt that a repeat of the erosion of household spending power seen after sterling’s last major depreciation in 2008 is on the cards, when the rise in inflation was exacerbated by a pick-up in commodity prices and a series of VAT hikes. Moreover, we remain optimistic that the decline in labour market slack will feed through into at least some pick-up in nominal wage growth. In any case, consumer spending should be supported by strong confidence, jobs growth, and supportive credit conditions.”