ONS warms of falling wage increases amid the cost of living
The UK wages continue to lag behind the cost of living, but the unemployment rate has dipped to 4.1% and job vacancies hit a fresh record high. Wages increased, but when inflation is factored in, income is down 0.8 percent from a year ago, according to the Office for National Statistics (ONS).
The rising cost of food, energy, and household goods has pushed inflation up. Inflation is expected to rise above 7%.
The ONS said wages increased 6.3% in January this year, and 10.3% over the same month last year.
Pay rises for pay-rolled workers easily outpace inflation in some industries, like science, finance, hotels, and information and communication. Businesses continue to face a shortage of workers, and pay is falling behind inflation.
A CEO of a large construction group, said that inflation and skills shortages were a “headache” at the moment in the UK.
Andrew Bailey, the Bank of England governor urged workers to ask for small pay rises to help stop inflation from rising. He said that it would be painful for workers to accept slower wage rises than prices, but wage increases were needed to prevent inflation from becoming entrenched.
Paul Dales, chief UK economist for Capital Economics, said the Bank was likely to take a more aggressive approach to interest rate increases this year and next.