British living standards fell at their fastest pace in more than eight years in February as wages continued to lag inflation.
Average non-premium earnings rose 4.1 percent from a year earlier, the Office for National Statistics said on Tuesday.
In price-adjusted terms, however, they fell by 1.3 percent in the same period, the sharpest since the end of 2013.
The numbers show how the rising cost of living is depriving Brits of the benefits of a strong job market.
Unemployment fell to 3.8 percent in the three months to February, the lowest since late 2019 and a level not seen since the 1970s.
Meanwhile, job vacancies rose to a new record of nearly 1.28 million in March, reflecting acute labor shortages.
“Recent employment data showed some of the heat could be coming from the job market. Still, picking up wage growth is likely enough to convince the Bank of England to hike interest rates again in May,” said Ana Luis Andrade and Dan Hanson of Bloomberg Economics.
Still, the data also indicated that stellar growth could be slowing. Employers hired just 35,000 new employees last month, well below estimates and the smallest increase since February 2021.
The earnings squeeze is expected to weigh on overall economic growth for the remainder of the year. Households are in for more pain as the latest tax hikes and soaring energy bills threaten to deal the biggest blow to UK living standards
The possibility of the first dose of double-digit inflation in four decades is increasing pressure on the government to do more to help hard-pressed consumers.
“The UK economy continues to create jobs but companies are still struggling to recruit and pay is not keeping up with inflation,” said Eugenia Migliori, principal policy adviser at the Confederation of British Industry.
“Persistent shortages of skilled workers and labor as well as rising costs are putting a strain on households and dampening business optimism for the coming months.”
Finance Minister Rishi Sunak has been criticized by economists and charities alike for delivering an aid package that skipped aid to the country’s poorest.
The Bank of England, meanwhile, is on course to raise interest rates for a fourth time in May in a bid to contain longer-term price pressures.
ONS data showed wage increases for three months rose to 4 percent, resulting in a 1 percent real contraction.
“We’re helping cushion the impact of global price increases by providing over £22 billion of cost-of-living support this financial year,” Sunak said in a statement. “We also help people find new jobs and make sure work always pays as it’s the best way to support households longer-term.”
https://www.independent.ie/business/world/uk-workers-see-biggest-fall-in-living-standards-in-8-years-41544539.html UK workers see the biggest drop in living standards in 8 years