Real wages falls for sixth month in a row
Brexit-induced inflation continues to hit workers as real wage growth falls again.
The latest labour market report shows UK wage growth continues to fall behind inflation. The report by the Office for National Statistics (ONS) shows average weekly earnings in August grew by just 2.1% and by 2.2% including bonuses. But a higher rate of inflation means workers real wages actually fell by 0.4% and by 0.3% including bonuses.
It’s the sixth month in a row workers have seen a cut in their real wages. The last time workers saw real wage growth was in January. Here’s a chart from the ONS showing the impact of rising inflation on real wage growth.
According to the Resolution Foundation, the latest fall in real pay means earnings are no higher than they were in February 2006. In a statement, the think tank said it expected the pay squeeze to “deepen further in the Autumn to around -0.6%” and that workers are unlikely to see real wage growth until next year.
Yesterday, the ONS published inflation data for September showing inflation at 3%, which is the highest rate since April 2012. Bank of England governor told MPs yesterday that he expected inflation to rise further over the next few months so it’s unlikely workers will start seeing real wage growth soon. As the Guardian reports, Carney said the pound’s decline since the Brexit vote was the “sole reason” inflation had risen as high as it had.
The sole reason that inflation has gone up as much as it has is the depreciation of sterling.
Mark Carney, Bank of England governor