Wages rises were higher than expected in December while the unemployment rate fell slightly, official figures show.

The percentage of people without a job and looking for work fell to 3.9% from 3.8% a month earlier and average weekly earnings rose more than expected, by 6.2% compared to the 6% forecast by economists.

It’s a slower pace, however, than the 6.5% wage increases recorded in the three months to November but still above the rate of overall price rises. When bonuses are factored in, pay grew 5.8%.

The figures may still be of concern to the interest rate-setters at the Bank of England, who will be keeping a close eye on wage rises, having previously identified them as an inflationary concern. Of particular interest is the private sector wage growth which decreased from 6.6% to 6.2% but remained above its 6% forecast.

But the Office for National Statistics (ONS) had warned against reading too much into its own statistics.

The body last week again revised its assessment of the labour market, saying the UK jobless rate may have been much lower, at 3.9%, than the 4.2% estimates suggested at the end of 2023.

“We would advise caution when interpreting short-term changes in headline rates”, it said.

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The ONS update was based on new population estimates as it attempts to bolster the quality of the data.

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Its labour market data, which also comes through face-to-face interviews and surveys, had suffered from low participation rates since the pandemic.

In response to today’s data Chancellor Jeremy Hunt said: “It’s good news that real wages are on the up for the sixth month in a row and unemployment remains low, but the job isn’t done.

“Our tax cuts are part of a plan to get people back to work so we can grow the economy – but we must stick with it.”

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