British workers’ incomes have been shrinking in real terms amid soaring inflation despite significant wage rises, official figures show.
According to the latest data released by the Office for National Statistics (ONS) on Sept. 13, the average total pay received by UK workers, including bonuses, grew by 5.5 percent in May to July 2022.
But with Consumer Prices Index (CPI) inflation taken into account, total pay fell by 3.6 percent in real terms year-on-year.
This is the largest fall in total pay since February to April 2009, when it fell by 4.5 percent.
According to the ONS, the average regular pay (excluding bonuses) rose by 5.2 percent from May to July 2022, but in real terms the actual pay fell by 3.9 percent owing to inflation.
Energy and Food
The CPI inflation jumped to a fresh 40-year high of 10.1 percent in July as energy and food bills sent living costs racing higher.As part of a package to tackle the cost of living squeeze, Britain’s new Prime Minister Liz Truss announced on Sept. 8 that the price of a typical British household’s energy bill will be capped at £2,500 ($2,933) a year for the next two years.
The scheme is on top of a £400 ($470) energy rebate that was already set to begin arriving in October, meaning bill sizes will remain largely unchanged this winter, depending on the amount of energy used.
The move is set to rein in the peak in inflation, but wages are still unlikely to keep pace with rising costs.
According to research firm Kantar’s latest report, published on Sept. 13, British consumers are now paying a record £571 ($670) more on average for their groceries than last year.
Grocery price inflation hit 12.4 percent during the past month, up from last month’s previous record of 11.6 percent.
The latest figure means that the average annual grocery bill will increase from £4,610 ($5,406) to £5,181 ($6,074) if consumers do not change the products they buy and how they shop to cut costs.
Categories like milk, butter, and dog food are rising particularly quickly, at 31, 25, and 29 percent respectively.
“It seems there’s no end in sight to grocery inflation as the rate at which food and drink prices are increasing continues to accelerate,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
