Boost for squeezed Brits as wages grow ahead of inflation after months of soaring prices in cost of living crisis
12 September 2023, 07:15 | Updated: 12 September 2023, 08:14
Wages grew ahead of inflation in July after months of soaring prices, new figures show.
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It is the first time in more than a year that pay has caught up with price rises.
Data from the Office for National Statistics showed that average earnings grew by 7.8% before bonuses were taken into account in the three months to July.
That is ahead of the consumer price index (CPI), one of the methods of measuring inflation, which fell to 6.8% - meaning prices are still growing but at a lower rate than before as energy costs eased.
"This means people's real pay is no longer falling," said the ONS.
However, the unemployment rate in the UK rose slightly in the three months to July - climbing to 4.3% from 4.2% form the prior three months.
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Chancellor Jeremy Hunt said: "It's heartening to see the number of employees on payroll is still close to record highs and that our unemployment rate remains below many of our international peers.
"Wage growth remains high, partly reflecting one-off payments to public sector workers, but for real wages to grow sustainably we must stick to our plan to halve inflation."
The 7.8% climb in earnings was the same as the three months prior to May, and this has been the highest regular annual growth rate since comparable records started in 2001.
The highest growth rates were seen in the finance and business sector, which experienced 9.5% growth, while manufacturing came second at 8.1% - one of the highest annual rises recorded.
"Earnings in cash terms continue to increase at a record rate outside the pandemic-affected period," Darren Morgan, director of economic statistics at the ONS, said.
The latest inflation figures showed a sharp fall from 7.9% in June to 6.8% in the year to July
It means prices are still rising, and increasing at a rate above the desired 2% mark, but they are going up at a slower rate than before.
The drop was partly attributed to falling energy prices as the shock of the knock-on effects of Russia's invasion of Ukraine starts to dissipate.
The decrease followed record rise in wages, heaping more pressure on the Bank of England to tackle inflation, which it has been doing with interest rate rises.
