You are here: Home - Household Bills - News -

Wage growth fails to keep up with inflation

Written by: Emma Lunn
Pay rises have been wiped out by the surging cost of living, according to the Office for National Statistics (ONS).

Official figures show wage growth slowed just as inflation climbed to a 10-year high. Growth in average total pay (including bonuses) was 4.2% and growth in regular pay (excluding bonuses) was 3.8% among employees in September to November 2021. Meanwhile inflation jumped to 5.1% in November.

The ONS calculated that in real terms (adjusted for inflation), total and regular pay have shown minimal growth in September to November 2021, at 0.4% for total pay and 0% for regular pay. Single-month growth in real average weekly earnings for November 2021 fell on the year for the first time since July 2020, at negative 0.9% for total pay and negative 1% for regular pay.

On the plus side, ONS estimates for September to November 2021 show a continuing recovery in the labour market, with an increase in the employment rate and a decrease in the unemployment rate compared with the previous three-month period (June to August 2021).

The UK employment rate was estimated at 75.5%, 1.1 percentage points lower than before the coronavirus pandemic (December 2019 to February 2020), but 0.2 percentage points higher than the previous three-month period (June to August 2021).

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Inflation has waged war on pay and in November, salaries actually slid once inflation was taken into account. This has piled on the pressure for those struggling through the cost of living crisis, and things are going to get even worse.

“Wage rises have been falling steadily since spring 2021. Annual rises peaked at this point at 7.3% for regular pay and 8.8% for total pay, thanks to the fact that during the previous spring, wages had plummeted during the first lockdown. Meanwhile, inflation has ramped up from below 1% in February 2021 to more than 5% nine months later. In November, with inflation at 5.1%, it overtook wages.

“This has been devastating for anyone whose finances were already on a knife edge. We’ll get inflation figures for December tomorrow, but there’s every chance we’ll see it rise again – pushed up by not just by runaway energy and petrol prices, but relentless increases in the price of almost everything – from fresh food to home repairs. It means wages after inflation may well continue to fall through the end of 2021 and the beginning of 2022. For those whose budgets are under pressure, it’s a sure sign that things are set to get even worse.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week