Brits under further strain as wages squeezed again by rising inflation – how to cut your bills now
Inflation has jumped due to the slump in the value of the pound following last year's Brexit vote
BRITISH household finances are under further strain as wage growth continues to be squeezed by soaring inflation, official figures revealed today.
Pay - excluding bonuses - grew by 2 per cent in the three months to May, data from the Office for National Statistics showed, a pick-up on the 1.7 per cent increase seen the month before.
Still, this is well behind the inflation rate which has hit at four year high of 2.9 per cent in May.
This means that when the impact of inflation is factored in, average real total pay fell by 0.7 per cent in the month - the lowest growth since August 2014.
Inflation in the UK economy has been pushed by the slump in the value of the pound following the EU referendum in June last year.
Rising inflation is squeezing living standards as prices rose faster than wages.
In better news, the ONS data also showed that UK unemployment rate fell to a new 42-year low of 4.5 per cent. While the number of unemployed dropped by 64,000 to 1.49 million over the period.
"Despite the strong jobs picture, there has been another real-terms fall in earnings, with growth in weekly wages low and inflation still rising,"; Matt Hughes, senior statistician at the ONS, said.
John Hawksworth, chief economist at PwC, said real earnings growth remains deep in negative territory and this seems unlikely to change anytime soon.
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"This will dampen consumer spending power, though the continued strength of the jobs market should prevent the recent slowdown in the economy turning into a recession,” he added.
The Bank of England's policymakers have been watching wage growth closely for signs of inflatory pressures that may need to be addressed by raising interest rates.
Analysts said the latest figures make an August interest rate from the Bank less likely.
“Ongoing weak earnings growth and economic, political and Brexit uncertainties over the outlook provide a pretty strong case for the Bank of England to hold off from hiking interest rates in the near term at least," Howard Archer, chief economic Advisor to the EY ITEM Club, said.
Hannah Maundrell, Editor in Chief of , previously said: "There’s no escaping the fact that the luxury of low inflation is well and truly over with prices of goods and services rising left right and centre and the shiny new pounds in our pockets will unfortunately buy you less.
WHAT HAPPENS WHEN INFLATION RISES AND HOW TO CUT YOUR BILLS
PRICES will go up for most things – clothing, food, travel…the cost of living will get a bit more expensive
These rises have been fuelled by the weak pound and it means those on the lowest incomes will be hit hardest.
It means that not one of the 750 standard savings accounts on the market now beat inflation.
Here’s how you can protect yourself against rising inflation:
- Check you’re on a fixed rate energy tariff (one that guarantees the price you pay per unit) and if not switch
- By comparing tariffs British households could save up to £400 a year each.Some 70 per cent of consumers are on bog-standard expensive standard tariffs, when they should be shopping around for a better.deal.Comparisons websites, like or might help you to find a cheaper offer.
- The Sun online previously six clever ways to cut your food shopping bill including comparing prices before you shop, collecting coupons and never shop hungry.
- We've also wrote about MyFridgeFood - a website which gives you recipes based on what's in your fridge - meaning you'll never waste food again.
- Make sure your savings are earning an interest rate that’s higher than the rate of inflation – otherwise they’ll lose buying power over time – you might need to think about high interest current accounts
- Shop around for food and fuel so you’re not paying any more than you need to
- Check whether you could cut your mortgage repayments by switching to a fixed rate deal if you’re on your lender’s standard variable rate
Shoppers can also find coupons which they can printout on , and .
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