Real wages, the wages of workers who take inflation into account, fell 2.8% between March and May compared to the same period last year, according to data released Tuesday by the National Office of Statistics.
This is the fastest decline since the ONS began keeping records in 2001.
For months, rising world prices for energy and raw materials, exacerbated by the Russian invasion of Ukraine, has helped fuel global inflation. The world’s fifth largest economy has been one of the hardest hit among the world’s richest nations.
UK consumer prices hit a 40-year high of 9.1% in May, the highest among the G7’s leading economies, and are expected to rise above 11% by the end of this year despite a number of interest rate hikes.
And households are feeling the tension. Delicious energy and food bills have led the British to the worst cost of living crisis in decades. The Bank of England predicts that disposable income will suffer the second largest drop this year since records began in 1964.
Inflation of grocery bills reached nearly 10% in the four weeks ending July 10, according to data from research firm Kantar released on Tuesday. That means the British can expect to spend an additional £ 454 ($ 545) this year on food and staples.
Energy bills, which rose 54% in April, are estimated to exceed £ 3,000 ($ 3,603) a year for millions of households as of October, according to energy research firm Cornwall Insight. That’s when the government adjusts a maximum price that limits the amount suppliers can charge customers per unit of energy.
The Boris Johnson government has pledged £ 400 ($ 480) in family grants to help the millions of people struggling to pay their energy bills. It also succumbed to pressure last month and filed a £ 5 billion ($ 6 billion) tax on the extraordinary profits of oil and gas companies.
High inflation, combined with the detrimental policies of Brexit, have undermined the country’s growth. The Organization for Economic Co-operation and Development predicted last month that the UK economy was heading for stagnation, with zero GDP growth projected for 2023. This would be the G7’s worst performance in the world. next year.
The pound has also been hit this year, losing 11% of its value against the US dollar, which is likely to make the import of goods more expensive.
But there is a bright spot. Recruitment continues at a good pace last month, according to preliminary data from the ONS, with the number of people on the payroll growing by 3% compared to a year ago.
– Mark Thompson contributed to the report.