UK staff endure their greatest pay drop in 20 years as inflation bites

Actual pay — staff’ wages that take inflation under consideration — slumped by 2.8% between March and Could in comparison with the identical time final yr, in keeping with knowledge launched Tuesday by the Workplace for Nationwide Statistics.

That is the quickest decline for the reason that ONS started protecting data in 2001.

For months, rising international power and commodity costs — worsened by Russia’s invasion of Ukraine — have helped stoke international inflation. The world’s fifth-largest economic system has been one of many hardest hit among the many world’s wealthiest nations.

UK shopper costs hit a 40-year excessive of 9.1% in Could, the very best among the many G7 main economies — and is forecast to climb above 11% later this yr regardless of a sequence of rate of interest hikes.

And households are feeling the pressure. Eye-watering power and grocery payments have thrown Britons into the worst cost-of-living disaster in many years. The Financial institution of England predicts that disposable incomes will endure their second greatest decline this yr since data started in 1964.

Grocery invoice inflation hit practically 10% within the 4 weeks ending on July 10, in keeping with knowledge from analysis agency Kantar launched on Tuesday. That implies that Britons can anticipate to spend a further £454 ($545) this yr on meals and necessities.

Power payments, which rose by 54% in April, are estimated to prime £3,000 ($3,603) per yr for tens of millions of households from October, in keeping with power analysis agency Cornwall Perception. That is when the federal government subsequent adjusts a worth cap that limits the quantity suppliers can cost clients per unit of power.

Boris Johnson’s authorities has promised £400 ($480) in grants per household to assist out the tens of millions of individuals struggling to pay their power payments. It additionally bowed to strain final month and unveiled a £5 billion ($6 billion) tax on the windfall income of oil and fuel corporations.

Excessive inflation, mixed with damaging Brexit insurance policies have sapped the nation’s progress. The Organisation for Financial Co-operation and Improvement forecast final month that the UK economic system was heading to stagnation, with zero progress in GDP forecast for 2023. That may be the worst efficiency within the G7 subsequent yr.

The pound has additionally been hammered this yr, dropping 11% of its worth towards the US greenback, which can probably make it costlier to import items.

However there’s one shiny spot. Hiring is continuous apace final month, preliminary ONS knowledge confirmed, with the variety of folks on payroll rising 3% in comparison with a yr in the past.

Mark Thompson contributed reporting.

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