The supermarket chain announced on Friday that 28,000 of its hourly-paid workers in the UK will see a boost in wages starting September 1st. Entry-level pay will go up from £12.75 to £13 an

hour nationwide, and those who’ve been with the company longer will earn up to £13.95. Workers in London will get even higher rates to reflect the city’s cost of living.

This move keeps Lidl on par with rival Aldi, which also said its store assistants will earn at least £13 an hour from September. Tesco, the UK’s biggest supermarket, will raise its minimum hourly wage to £12.64 on the same date.

To put things in perspective, the national minimum wage is currently £12.21. The Low Pay Commission has already signaled that this figure will likely rise to £12.71 next year, in line with the government’s target for wages to reflect two-thirds of median earnings.

Meanwhile, the Bank of England is watching pay deals like this very closely as it debates whether to cut interest rates. Even though the jobs market has weakened—fewer payrolls and job vacancies—wage growth remains strong, which makes the central bank cautious about lowering rates too quickly.

So, for Lidl workers, this is another welcome bump in pay. But for policymakers, it’s another piece in the tricky puzzle of balancing inflation, wages, and interest rates. Photo by Jivee Blau, Wikimedia commons.