Brits’ living standards are being eroded by an inflation spike that is threatening to throw the UK’s economic recovery off course, reveals official figures released today.
For the first time in a year and a half, pay rises are being cancelled out by the soaring cost of living, according to the Office for National Statistics (ONS).
The corrosion of living standards, which occurs if wage increases fail to keep pace with inflation, has the potential to throttle the UK’s economic recovery from the Covid-19 crisis.
Real average weekly earnings last November fell annually for the first time since July 2020, dipping to 0.9 per cent for total pay.
There has only been a handful of times over the last decade that Brits’ living standards have been eaten into by inflation, the ONS said.
The inflation sting is set to get even worse, according to most top City economists, casting doubt over whether the British consumer can power the country’s economy over the coming year.
Real earnings will “fall further to minus 2.2 per cent as CPI inflation rises to a peak of 6.9 per cent in April,” warned Paul Dales, chief UK economist at Capital Economics.
The corrosion of living standards is “an unwelcome development which is likely to worsen over the next few months,” Martin Beck, chief economic advisor to the EY Item Club, said.
More to follow.
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