According to data published by the Office of National Statistics, despite nominal year-on-year salary increase of at least 4% for each month in 2022, employees’ real earnings in the United Kingdom are dropping due to inflation. Here is UK inflation rate vs Wage growth .
The last time real wage growth was negative was from April to July 2020, when the UK’s economy was affected by the first Covid-19-related lockdowns. Real earnings growth rates were positive for more than a year after a very swift rebound. This lasted until November 2021, when the UK was hit by shortages of goods and rising inflation. Rising energy and food prices have only accelerated this trend since Russia’s invasion of Ukraine in February 2022.
As of june- 2022 UK inflation stands at 8.5% and closing to Double digit numbers. While wage growth lagging around 4.2% creating wide gap between UK inflation and wage growth numbers.
UK inflation rate vs Wage growth
wage growth vs inflation uk
When compared to the same period in 2021, the average weekly earnings for total pay in the United Kingdom increased by 7% in the three months to September 2022, with regular pay increasing by 5.3 %. While wages are increasing, price increases are currently surpassing this growth in terms of regular and total pay, as seen by the Consumer Price Index’s 9.9% inflation rate for the same month.
UK wage growth vs inflation Forecast
With new prime minister UK is in path of increased cost cutting and higher tax. Forecasted inflation and Weaker growth could see inflation moderate at a value of 4.7% in financial year 2023 after averaging at 7.6% in 2022.