LONDON – The UK’s borrowing costs, as measured by the yield on short-term government bonds, rose above levels last seen after Britain’s “mini-budget” destabilizing the market after labor market data reported rising wage growth on Tuesday.

Yield on two-year-old sows It rose 23 basis points to 4.876% at 4:40 p.m. London time, surpassing the 4.75% set on Sept. 28 and the highest level since July 2008, according to Refinitiv data.

Year-on-year growth in UK average pay excluding bonuses accelerated from 6.7% to 7.2% in the February-April quarter, the fastest pace on record. Economists polled by Reuters had expected a 6.9% rise in wages for the first reported period since the national minimum wage rose to £10.42 ($13.1) an hour, from £9.50.

Actual salary, adjusted by inflationshowed wage growth of 2% including bonuses and 1.3% without them.

A report from Britain’s Office for National Statistics showed the employment rate rose by 0.2 percentage points over the same period as the number of people in work hit a record high. Unemployment was 0.1 percentage point higher due to a fall in the number of “economically inactive” people who are not working or looking for work.

Economists were quick to predict a sharp rise in gilt yields based on the data, fueling expectations of a rate hike by the Bank of England.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures “fuel the impression that the UK has a unique problem of entrenched high inflation”.

The central bank is trying to tame price growth, which is among the steepest of all advanced economies. in April to 8.7%..

“While we think next week’s inflation print will be softer and, more broadly, we see the inflation release ahead of the August meeting more in line with BoE May expectations, the slowdown in April and today’s labor contraction suggest further increases will follow. needed,” said Bruna Skarica, UK economist at Morgan Stanley.

It comes with the market pricing in a more than 81% chance that the US Federal Reserve will decide to hold off on raising rates at its meeting this week. CME FedWatch tool.

The “mini-budget” crisis in the sows, which sent the mortgage market into chaos and threatened to topple pension funds, came after former prime minister Liz Truss and former finance minister Kwasi Kwarteng announced a package of unfunded tax cuts in September last year.

— CNBC’s Ganesh Rao contributed to this report