Pay lags behind inflation giving workers biggest real-terms pay cut to date
This comes as grocery bills soar at fastest rate since 2008
Last updated 16th Aug 2022
Official figures have revealed that pay for UK workers lagged behind inflation at record levels last quarter.
The Office for National Statistics (ONS) said regular pay, excluding bonuses, grew by 4.7% over the three months leading up to June.
At the same time however, CPI inflation hit a new 40-year high of 9.4% at the end of June and is expected to peak at around 11% later this year.
Taking inflation into account, this means that the last quarter saw a 4.1% drop in regular pay for UK employees.
Average pay also fell by 3%
This represents the biggest slump for workers since records began in 2001.
Unemployment rate increases
ONS also revealed that unemployment rate also increased to 3.8% in the last quarter compared with the previous period's 3.7%.
This comes as job vacancies are reportedly down 20,000 from the previous period.
The price of the weekly shop has gone up
New research from data collection company Kantar has also shown that grocery price inflation has risen to 11.6%.
This is up from 9.9% the previous month.
The organisation have warned that this equates to a £533 annual increase in the average UK household's grocery bill.
Supermarket own-label products are more popular
Kantar have also revealed that sales of own-label products are up by nearly a fifth - 19.7%.
The data company puts this increase down to shoppers trying to save as much money as they can.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: "As predicted, we've now hit a new peak in grocery price inflation, with products like butter, milk and poultry in particular seeing some of the biggest jumps.
"This rise means that the average annual shop is set to increase by a staggering £533, or £10.25 every week, if consumers buy the same products as they did last year.
"It's not surprising that we're seeing shoppers make lifestyle changes to deal with the extra demands on their household budgets."
What the cost of living crisis means for you:
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.