Real wages fell at the fastest rate on record between April and June, according to the Office for National Statistics (ONS), as 40-year high inflation continued to hit UK households hard.
Pay – when considering soaring prices – fell by 3% on the year despite the highest growth in 15 years in regular wages (excluding the pandemic).
Household budgets are being squeezed by surging energy bills and higher fuel and food costs, with inflation hitting 9.4% in June. The Bank of England has tipped it to reach 13%.
This explains why regular pay growth, excluding bonuses, of 4.7% in the three months to June end is not enough.
"Excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001,” Darren Morgan, ONS director of economic statistics, commented.
Private sector wage growth heavily exceeded that of the public sector, with Morgan confirming it was the "largest difference we have seen for 20 years." They grew 5.9% and 1.8% respectively.
Danni Hewson, AJ Bell financial analyst, said: “Another month, another chance for inflation to nibble away at the nation’s pay-packets.
“But there are signs the labour market is loosening up.
“Vacancies actually fell over the last quarter for the first time since mid-2020 when the first lockdown ended, and life surged back to some kind of normal.”