Real pay fell for the 15th month in a row, official figures revealed on Tuesday, as sky-high inflation continued its squeeze on living standards.
Data from the Office for National Statistics showed that regular pay — which excludes bonuses — fell by 2.3 per cent in the three months between December last year and February, once adjusted for inflation.
Although economists expect the Consumer Prices Index (CPI) measure of inflation to fall from 10.4 per cent to 9.8 per cent when the latest monthly figures are released tomorrow, inflation has been above 10 per cent since August last year.
And while wages have been rising, they have failed to keep pace with prices. According to the latest ONS figures, regular pay grew by 6.6 per cent in the three months to February — a slight increase on the previous month.
The gap between private sector and public sector workers also narrowed with private sector pay up 6.9 per cent compared to public sector pay which increased by 5.3 per cent.
But with nurses and junior doctors threatening more strikes this summer, the latest fall in real pay could increase the pressure on the Government to settle the long running dispute.
Rishi Sunak yesterday ruled out an improved offer for nurses after the Royal College of Nursing rejected a 5 per cent rise and a one-off bonus on Friday. Ministers hope a sharp fall in inflation in the coming months will force nurses and junior doctors to accept the deal.
Ben Harrison, director of the Work Foundation think tank at Lancaster University, said: “This is another challenging set of figures for workers who are seeing their wages fall in real terms for the 15th consecutive month.
“With inflation still high at 10.4 per cent, it is vital public sector industrial disputes are resolved as quickly as possible to ensure those on low and insecure incomes are better able to deal with the cost of living crisis.”
Chancellor Jeremy Hunt said: “While unemployment remains close to historic lows, rising prices continue to eat into pay cheques which is why halving inflation this year is one of our top economic priorities.”
But Labour’s Shadow Chancellor Rachel Reeves attacked the Conservatives’ “lack of ambition for Britain” which she said was leaving “real wages down” and “families worse off”.
Most economists expect the CPI to dip below double digit territory as the impact of higher energy and fuel prices starts to fall out of the comparison with last year.
Another shock similar to February’s unexpected rise in the CPI to 10.4 per cent would leave the Bank of England little choice but to hike interest rates yet again to 4.5 per cent when its Monetary Policy Committee meets in May.
Victoria Clarke, UK chief economist at Santander CIB, said: “For the BoE, although there are hints of a softening in the tightness of the jobs market, particularly in the continued fall in vacancies, the jobs market remains tight overall. The latest report does not deliver the reassurance that the MPC is likely to be looking for that pay growth is moderating down towards rates consistent with the BoE inflation target.”
The ONS said the unemployment rate rose to 3.8 per cent in the three months to February, a slight jump from 3.7 per cent in the previous three months.
