Rising cost of living outstrips pay growth

pay growth

The most recent inflation figures for February showed a 6.2 per cent rise and it is expected to have risen further in March

Pay jumped by four per cent but real wages fell by one per cent after taking inflation into account, according to the Office for National Statistics (ONS) figures out today.

Total pay including bonuses grew by 5.4 per cent in the same period to beat inflation by 0.4 per cent.

There were vast differences in growth between the public sector, where total pay was up just 1.9 per cent, compared to the private sector where pay soared by 6.2 per cent.

Private sector pay is now increasing at its fastest level since the financial crisis.

The most recent inflation figures for February showed a 6.2 per cent rise and it is expected to have risen further in March.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: Unfortunately, the worst is yet to come.

The Bank of England is now expecting inflation to remain higher for the rest of the year, as the crisis in Ukraine puts pressure on everything from food and fuel to energy. The peak is expected to come in October, when it hits 8.7 per cent, but it will do an awful lot of damage well before that, she said.

The UK unemployment rate fell to 3.8 per cent from 3.9 per cent a month earlier, according to data also released by the ONS today.

And job vacancies are at a record high of 1.29m, as the number of people unemployed for up to 12 months fell to lows not seen before.

In the Spring Statement on 23 March, the government announced a range of cost of living support measures from a 5p cut in fuel duty for 12 months, to a rise in the national insurance threshold to £12,500 ($16,248.06) from July and help with energy bills for 28m people, although critics suggest this will not go far enough to bridge the affordability gap.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Getting Money Wise. The information provided on Getting Money Wise is intended for informational purposes only. Getting Money Wise is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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