More pain for Brits as wages fall by 4.4% against spiking inflation – the fastest rate since 2009 – but jobs market stays strong with payroll numbers rising and inactivity nudging down
- ONS data show that wages are still a long way off keeping up with inflation
- The figures have been released the day before Jeremy Hunt unveils his Budget
Brits are still being hammered by inflation with real wages dropping at an alarming pace, it was revealed today.
Total pay was down 4.4 per cent compared to the headline annual CPI rate in the three months to January, the worst fall since 2009.
Regular pay – excluding bonuses – tumbled 3.5 per cent, although that was slightly less dramatic than the 4.1 per cent seen last year.
Despite the grim cost-of-living pressure, the latest Office for National Statistics data showed that the jobs market remains resilient.
While vacancies fell by 51,000 in the three months to February, there were still 1,124,000 posts available. Numbers on payrolls increased by 98,000 last month to 30million, and unemployment was almost unchanged.
As Jeremy Hunt prepares to unveil measures to get people back into the labour force in his Budget tomorrow, the figures showed the economic inactivity rate nudging down by 0.2 percentage points to 21.3 per cent in the quarter to January. That was largely down to young people leaving education for jobs, according to the ONS.
Mr Hunt said: ‘The jobs market remains strong, but inflation remains too high. To help people’s wages go further, we need to stick to our plan to halve inflation this year.
‘Tomorrow at the Budget, I will set out how we will go further to bear down on inflation, reduce debt and grow the economy, including by helping more people back into work.’
Total pay was down 4.4 per cent compared to the headline annual CPI rate in the three months to January, the worst fall since 2009
The figures have been released the day before Chancellor Jeremy Hunt unveils his Spring Budget
The rate of increase in pay appears to be slowing, possibly in response to evidence that inflation is starting to ease
Amid a wave of strikes by state workers, public sector pay spiked by 4.8 per cent annually over the period.
Although that was lower than the 7 per cent in the private sector, it was the highest since the three months to February 2006 – which saw a 5.2 rise.
The rate of increase in pay appears to be slowing, possibly in response to evidence that inflation is starting to ease.
That could potentially bear on the Bank of England’s decision on interest rates next week, with fears of a meltdown in the banking sector already pushing back the prospect of a big hike.
The ONS said the number of people in work increased slightly, with a nationwide employment rate of 75.7 per cent between November 2022 and January this year.
This increase is thought to have been driven by a rise in part-time and self-employed workers.
While the unemployment rate has remained unchanged, the number of people out of work for over 12 months increased slightly in the last three month period.
The ONS said the dip in vacancies was due to ‘uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment’.
The rate of Consumer Prices Index inflation fell to 10.1 per cent in January from 10.5 per cent in December. Figures show annual percentage change
Employment minister Guy Opperman said: ‘We’ve promised to grow the economy in order to create more well-paid jobs, and we want everyone to have the same opportunity for a fulfilling work life.
‘That’s why we’re focused on tackling inactivity, and it is encouraging to see even more people moving into jobs or taking steps to search for work.’
