Earnings for the average employee in Great Britain increased again over the past year, according to the Office for National Statistics's latest analysis, but when adjusted for inflation the growth is modest underscoring the tight squeeze many households continue to face.
For the three-month period ending September 2025, the report found that “regular pay” that is, base pay excluding bonuses rose by 4.6% year-on-year. Total pay, which includes bonuses and other pay elements, was up 4.8% over the same period.
In absolute terms, for the whole economy (seasonally adjusted), regular pay averaged around £684 per week, while total weekly earnings came to about £733.
Inflated costs blunt real gains but wages still outpace prices
While nominal pay growth remains reasonably strong, the real story how far pay increases stretch once inflation is taken into account is more nuanced. Using the ONS’s preferred inflation measure, CPIH (which includes housing costs), average regular pay rose by 0.5% in real terms, and total pay increased by 0.7% in the year to September 2025.
If instead the somewhat more restrictive CPI measure (excluding owner-occupiers’ housing costs) is used, real growth looks a little better: regular pay grew by around 0.8%, and total pay by about 1.0%.
That means that while pay packets are rising, so are household expenses, which may limit how much improvement workers actually feel in their daily lives.
The data also reveal differences across sectors. The public sector continued to lead in wage growth, with regular pay rising 6.6% annually in the July–September 2025 period up from 6.0% in the previous quarter. Total pay in the public sector rose 6.8%.
Among private-sector industries, the biggest gains were seen in sectors such as wholesaling, retailing, hotels and restaurants, which posted regular pay growth of 5.7%, the highest within the private sector for that period.
By contrast, some industries including finance and business services, manufacturing, and construction lagged behind in terms of pay growth. The divergence points to a labour market that remains uneven, with certain sectors feeling more pressure to raise wages than others.
What the trends mean
That wages are rising even if real-terms gains are modest offers a glimmer of relief for many workers at a time when inflation remains stubborn. An increase in regular pay of 4.6% suggests employers continue to offer raises presumably to keep staff or respond to competition for workers especially in sectors where demand is high.
But the modest real-growth numbers suggest not all households will feel significantly better off. For those whose expenses rent, food, energy have risen fast, a 0.5–1.0% real increase in weekly take-home earnings may do little to cushion the cost-of-living pressures.
Moreover, the relatively strong growth in public-sector pay is partly driven by base-effect distortions (some pay rises were reportedly paid earlier in 2025 than in 2024) which means private-sector workers may continue to shoulder more of the inflation burden.
Another question is whether the current pace of wage growth is sustainable if inflation stays elevated or if economic growth slows. If employers face rising costs or weakening demand, future pay rises could be more limited a risk that could erode even the modest gains seen in the latest data.
Broader labour-market context
The pay data comes in the context of a labour market that, according to the ONS’s broader November 2025 labour market summary, shows mixed signals: employment levels, job vacancies and other labour-market indicators have seen fluctuations, reflecting uncertainty both among employers and workers.
Still, the fact that average weekly earnings continue to grow and do so in both public and select private sectors signals a labour market that remains in relative resilience, even if the gains are not dramatic in real terms.
Shahriena Shukri is a journalist covering business and economic news in Malaysia, providing insights on market trends, corporate developments, and financial policies. More about Shahriena Shukri.
