Inflation outstrips rising wages in biggest finance squeeze for generations
WAGE rises have been outstripped by inflation — as workers face the tightest squeeze on finances in generations.
The gloomy economic statistics came yesterday despite more people being in work and with more jobs available.
Britain’s post-pandemic job market has bounced back as the number of people on payrolls jumped by 108,000, job ads hit nearly 1.3million and the unemployment rate dropped to 4.1 per cent.
Chancellor Rishi Sunak said that having more people in work was proof that the jobs market was “now healthier than most could have hoped for”.
And Martin Beck, of economic forecasters the EY Item Club, added: “The jobs market largely shrugged off the drag on activity from Omicron in December.”
Better-than-expected wage growth at 4.3 per cent was recorded thanks to bigger Christmas bonuses.
But it was all wiped out by soaring inflation, which is at a near-30-year high of 5.4 per cent and set to soar even further.
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Sam Beckett, of the Office for National Statistics, warned: “Real total pay fell in the year to October to December 2021, despite a strong recovery in bonuses.”
Hannah Slaughter, of the Resolution Foundation think tank, called it the “tightest real wage squeeze in generations”.
She added: “The UK needs faster productivity growth.”
Families are facing a huge squeeze on incomes as prices rise, petrol reaches record highs, energy soars and National Insurance is increased.
The Government has already been forced to intervene to take the edge off with a £150 council tax rebate and £200 energy loan discount.