Real pay for UK workers fell for the second month running as wage rises were more than offset by rising inflation, official figures showed.
Regular pay, excluding bonuses, rose 4% in the three months to February, the Office for National Statistics said. The ONS said pay adjusted for inflation fell 1%. Including bonuses, real pay rose 0.4%.
The figures show incomes being squeezed by rising prices before a further increase that took inflation to 6.2% in March from 5.5% in February. The Bank of England expects inflation to peak at 8% or higher in 2022 and household budgets are also under pressure from tax increases.
Real pay fell despite rising employment. The ONS’s labour force survey measure of employment rose by 10,000 in the three months to February but the increase was less than the 52,000 analysts expected on average. The headline three-month average unemployment rate dipped to 3.8% from 3.9% a month earlier in line with expectations.
Laith Khalaf, head of investment analysis at AJ Bell, said the pay data was the “calm before the inflationary storm” with implications for the wider economy.
“This month price rises are going to move up a notch, and really exert pressure on consumer purses, especially when combined with tax and National Insurance increases,” Khalaf said. “Real regular pay is already running 1% behind inflation, which means declining living standards for working people, and with inflation on the rise, that’s only going to get worse.”
The ONS said early estimates for March showed the number of payrolled employees rose by 35,000 in March from February.