British workers are beginning to feel the pinch of a post-Brexit vote surge in consumer prices, new official statistics show.
Wage growth – including bonuses – was 2.3 per cent for the year to February, the Office for National Statistics (ONS) said today. Excluding bonuses, wages rose by a marginally lower figure of 2.2 per cent.
This means that real wage growth – the increase once the effect of inflation has been deducted – was just 0.2 per cent overall and 0.1 per cent for those not paid a bonus in February.
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Those are the lowest figures since 2014, says the BBC.
The annual rate of wage increases was flat compared to January. If there is no change again for March then wages will be flatlining overall and falling in real terms excluding bonuses.
That's because the ONS confirmed yesterday that inflation last month was running at 2.3 per cent.
Since the Brexit vote the pound has slumped by nearly a fifth against the dollar and also against other currencies, sending import prices higher and pushing up consumer prices.
Experts, including the Bank of England, reckon inflation could hit three per cent this year. Without a significant shift in wage growth this means pay will be falling again in real terms for the first time in three years.
Last month the Resolution Foundation think-tank predicted real wage rates would not return to pre-crisis levels until 2022, marking the worst wage squeeze "since the Napoleonic wars".
The positives for the UK economy in today's data are that unemployment has continued to fall despite the Brexit-related uncertainty.
The number of unemployed fell by 45,000 to 1.56 million in the three months to February, while the number of people in work rose 39,000 to 31.8 million.
At 74.6 per cent the employment rate is the joint highest since records began in 1971.
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