UK wages dropped by 0.6% in real terms in the three months to April as inflation continues to take a toll on British households, according to the Office for National Statistics.
Pay growth dropped to a weaker than expected 1.7% in the quarter, while inflation rose to 2.9% last month, resulting in a pay cut of £147 for the average UK worker.
Pay growth was the weakest since October 2014. There hasn’t been such a big gap between pay rises and inflation since August 2014.
Unemployment dropped by 50,000 to 1.53 million in the quarter, a 42-year low unemployment rate of 4.6%.
The number of people in work reached a new high of 74.8%.
However, although the number of people working increased, the number of job vacancies also increased by 9,000 since February. In the March to May period there were a total of 770,000 job vacancies.
ONS senior statistician Matt Hughes said: “Many labour market indicators remain strong, with the employment rate at a joint record high and the inactivity rate at a joint record low since comparable records began in 1971.
“On the other hand, with wage growth continuing to slow and inflation still rising real pay is down on the year.”
Ben Brettell, senior economist at Hargreaves Lansdown, was quoted by the BBC as saying: “The UK economy faces a dangerous cocktail of political uncertainty, slowing growth and shrinking real wages.
“Unemployment remains at a multi-decade low of 4.6%, but wage growth for the three months to April undershot economists’ forecasts, meaning the squeeze on household finances is worse than previously thought.”