United Kingdom wage growth falls behind inflation even as jobless rate sinks
INFLATION hit an nearly four-year high last month with fresh concerns the rise will impact upon living standards in the north.
Meanwhile, the food sub-index increased by 2.04 per cent in April, down by 0.17 per cent points from 2.21 per cent recorded in March.
The Consumer Price Index rallied to 2.7 per cent from a rate of 2.3 per cent in March, which had been also the highest level since September 2013.
The Statistics Department said the increase was fuelled by price rises in food sub-groups comprising Oils and Fats (39.1 per cent), Fish and Seafood (6.2 per cent) and Meat (4.2 per cent).
The rising rate of inflation and CPI will cause a squeeze on pay, the growth of which is expected to remain at a muted 1% over the year to come. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
Nominal earnings slowed to growth of 2.1 percent, an eight-month low.
The rise in inflation rates was believed to have been driven up mostly by the rising airfare prices due to the number of holidays in the past months.
A separate study by the Chartered Institute of Personnel and Development said employers expected to increase pay by just 1% in the coming year.
That meant pay, adjusted for inflation, fell by 0.2 per cent in the first three months of the year, the first fall since the third quarter of 2014.
According to the NBS in its new report, the inflation rate, put at 17.24 percent, declined a little further from the 17.26 percent recorded in March.
Just recently, Bank of England Governor Mark Carney warned on how wage growth would be surpassed by inflation as the year 2017 is now proving to be a challenge for British consumers.
Despite the weak wage growth, there are signs of continued strength in the United Kingdom labor market.
Ballooning import prices triggered by the Brexit-hit pound are a key factor behind the rise in everyday prices as companies pass on rising costs to consumers.
CPIH – which includes CPI and owner occupiers housing costs – hit 2.6% in the month, again up significantly from March.
But he added that the Bank of England was still unlikely to increase interest rates from their 0.25% low. But as traders realised that the latest figures are unlikely to change the BoE’s outlook, sterling soon fell back to drop below the 1.29 level to trade around 1.2880 dollars in afternoon European session.