Rising inflation levels continue to stunt wage growth

Inflation
Rising inflation levels continue to push down wage growth in the U.K

Rising inflation levels continue to stunt wage growth in the U.K, according to the latest figures from the Office of National Statistics (ONS).

Average earnings fell in real terms by 0.6 percent in three months to April, compared to the same period last year.

Before accounting for inflation, earnings rose by 1.7 percent excluding bonuses and were up 2.1 percent including bonuses, the ONS figures revealed.

The ONS said:

“Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) fell by 0.4 percent including bonuses, and fell by 0.6 percent excluding bonuses, compared with a year earlier.”

Unemployment dropped by 50,000 to 1.53 million in the three months to April, which marks the lowest figure on record since the figures were first collated in 1975.

In addition, the number of people in work hit a new record of 74.8 percent, similarly, the best since records began in 1971.

Nevertheless inflation continued to push up and affect wage growth, rising by 2.9 percent in May.

Suren Thiru, Head of Economics at the British Chamber of Commerce, said of the figures:

“The continued rise in the number of vacancies is further evidence of the growing skills shortage.

“While employment levels are high by historic standards, businesses report that they are increasingly struggling to find staff with the right skills, which is constraining investment and productivity.”

In terms of regions, Northern Ireland had the lowest employment rate across the period at 68.8 percent. Conversely, the West Midlands reported the largest increase with up to 65,000 entering employment. This was contrasted by the East of England which saw the largest decrease of 36,000.

In terms of the number of people classed as “unemployed”, London had the highest rate of individuals classified as “unemployed” coming in at 6 percent, compared with the lowest in the South West of 3.4 percent.

According to the latest statistics, those in the capital remain at the top-end for average salaries of £34,849 compared to the national average of £26,108.