The UK unemployment rate has fallen below 6% for the first time in six years.

The proportion of the population out of work dropped to 5.8% between September to November 2014, lower than for June to August 2014 (6.0%) and lower than for a year earlier (7.1%), according to the Office for National Statistics.

Perhaps more significantly for UK households, wage growth also continued to tick up faster than inflation. Pay for employees in Great Britain increased by 1.7% including bonuses and by 1.8% excluding bonuses while consumer prices were only 1% higher in November than a year earlier.

However, the pace of wage rises is still modest suggesting that income rises are unlikely to reverse downwards pressure on inflation from falling energy prices. This might help explain the surprise announcement that the Bank of England’s rate-setting body, the Monetary Policy Committee, voted unanimously to keep rates unchanged in January — with two of its members reversing earlier votes for a modest rate increase.

The more dovish stance reflected increased risk that the fall in consumer prices due to falling oil prices could potentially become a more persistent problem if expectations of lower prices become entrenched. As the MPC minutes state:

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