Source > Yahoo News
14 June 2022, 16:37 BST
Figures released by the Office for National Statistics (ONS) show the growth in regular pay, excluding bonuses, in the UK between February and April was 4.2%.
While average pay is increasing, it is doing so at a slower rate than inflation – the increase in the price of something over a period of time – which hit 9% in the year to April 2022 in the UK, the highest rate for 40 years.
In short, this means people’s money won’t go as far.
The chart below illustrates the gap between the rises in inflation and pay growth.
The ONS said that in real terms (adjusted for inflation), regular pay fell by 2.2% in February to April 2022
Last week, prime minister Boris Johnson warned of a “wage-price spiral” if pay packets were to increase in line with inflation.
He said: “We can’t fix the increase in the cost of living just by increasing wages to match the surge in prices.
“When a country faces an inflationary problem you can’t just pay more and spend more, you have to find ways of tackling the underlying causes of inflation.
“If wages continue to chase the increase in prices then we risk a wage-price spiral such as this country experienced in the 1970s.”
The latest figures come just days after a separate ONS poll revealed that more than three quarters of Britons are worried about the rising cost of living.
Of those surveyed, 77% said they are very or somewhat worried about the cost of living.
Another ONS poll showed that 52% of Britons are using less gas and electricity in an effort to reduce costs.
The percentage who say they are spending less money on food and essentials also increased, from 36% to 41% over a two-week period.
Cost of living crisis
Tue, 14 June 2022, 4:37 pm·3-min read
In this article:
- Cost of living crisis
The striking difference between pay growth and inflation has been laid bare by new figures, demonstrating the UK’s struggle with the cost of living crisis.
Figures released by the Office for National Statistics (ONS) show the growth in regular pay, excluding bonuses, in the UK between February and April was 4.2%.
While average pay is increasing, it is doing so at a slower rate than inflation – the increase in the price of something over a period of time – which hit 9% in the year to April 2022 in the UK, the highest rate for 40 years.
In short, this means people’s money won’t go as far.
The chart below illustrates the gap between the rises in inflation and pay growth.
The ONS said that in real terms (adjusted for inflation), regular pay fell by 2.2% in February to April 2022
Last week, prime minister Boris Johnson warned of a “wage-price spiral” if pay packets were to increase in line with inflation.
Read more: The everyday value food items that are actually falling in price
He said: “We can’t fix the increase in the cost of living just by increasing wages to match the surge in prices.
“When a country faces an inflationary problem you can’t just pay more and spend more, you have to find ways of tackling the underlying causes of inflation.
“If wages continue to chase the increase in prices then we risk a wage-price spiral such as this country experienced in the 1970s.”
Watch: Boris Johnson warns of ‘wage-price spiral’ if pay rises with inflation
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PM warns of ‘wage-price spiral’ if pay rises with inflation
BORIS JOHNSON: We are
constrained in what we can do,
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The latest figures come just days after a separate ONS poll revealed that more than three quarters of Britons are worried about the rising cost of living.
Of those surveyed, 77% said they are very or somewhat worried about the cost of living.
Another ONS poll showed that 52% of Britons are using less gas and electricity in an effort to reduce costs.
The percentage who say they are spending less money on food and essentials also increased, from 36% to 41% over a two-week period.
Last month, Jonathan Brearley, chief executive of energy regulator Ofgem, warned that the energy price cap is expected to rise to about £2,800 in October, adding about £800 to the average annual bill.
Ofgem had already increased the cap by £693 to £1,971 in April.
The ONS also revealed that the number of UK workers on payrolls rose by another 90,000, or 0.3%, between April and May to 29.6 million.
The unemployment rate edged up slightly to 3.8% in the three months to April, from 3.7% in the previous three months, though it remained close to 50-year lows.
Shadow work and pensions secretary Jonathan Ashworth said: “Work should be the best defence from the rising cost of living, yet millions in work are in poverty, real wages are plummeting, the numbers in overall employment are below pre-pandemic levels, and the numbers on out-of-work benefits not looking for work is higher than pre-pandemic.”
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