Living standards in Britain continue a death spiral as wages fail to outpace inflation amid soaring energy costs, according to new data.
Bloomberg, citing data from the Office for National Statistics, said average earnings excluding bonuses for February dropped 1.3%, the most since 2013.
Negative real-wage growth indicates millions of Britons are falling behind despite a strong labor market. Unemployment fell to 3.8% in the three months through February, the lowest since late 2019 and on par with levels from the 1970s. However, the hot labor market will force the Bank of England to raise interest rates in May, which could hinder economic growth.
The squeeze on incomes comes from several factors, including soaring energy, food and shelter prices, and tax hikes.
“Household incomes are being obliterated as wages fail to keep pace with the spiraling cost of living,” said Frances O’Grady, general secretary of the Trades Union Congress.
“We can’t go on like this. The Chancellor must come back to parliament with an emergency budget to help people through this crisis.”
High inflation has pushed the UK Misery Index, an economic indicator to gauge how the average person is doing, to three-decade highs, a sign discontent is emerging.
The Centre for Economics and Business Research (CEBR) points out that increasing household misery comes from soaring energy costs.
The average UK household will now pay 54% more for their energy bills compared to the six month period between October 2021 and March 2022 and a whopping 73% more than compared to a year ago. Meanwhile, petrol prices are up by 30% on the year while diesel prices have risen even faster, by 36%.
In short, the cost of living crisis has well and truly arrived in the UK. Over the coming months, the headline inflation rate is expected to rise a further 2.5 percentage points from its February level of 6.2%, far outstripping wage growth, which has trended downwards since the statistically inflated highs seen in the summer last year.