Figures show drop in unemployment levels as inflation rises
Inflation is predicted to rise again in April
The number of jobless people in the UK has dropped below pre-pandemic levels, but earnings continue to fall behind increasing inflation, according to the Office for National Statistics.
Breaking down the data, there were 1.34 million unemployed people living in the U.K. in January.
This is down 88,000 on the previous three months and below the 1.36 million recorded in December to February 2020.
The figures also revealed the tightening squeeze of the cost-of-living crisis, as regular pay failed to keep up with soaring inflation, with average weekly earnings excluding bonuses up 3.8% between November and January.
When taking rising prices into account, as measured by Consumer Prices Index (CPI) inflation, wages also fell by 1.6% compared with a year earlier.
Pressure on household finances is also set to intensify due to the Ukraine conflict, with gas and fuel prices set to see inflation rise from 5.5% currently to nearly 9% or more in April.
READ MORE: Financial pressures for families ahead as cost of living crisis hits
Chancellor Rishi Sunak acknowledged concerns over the rising cost of living, but cheered "a year of falling unemployment and a stronger jobs market bounce-back than so many predicted."
He said: "I am confident that our labour market is in a good position to deal with the current global challenges, with payrolled employee numbers above pre-pandemic levels in every nation and region and redundancies at record lows."
The Office of National Statistics also revealed that while unemployment is down, vacancies hit a new high.
Samuel Tombs, at Pantheon Macroeconomics, has predicted that the jobs market may start to come off the boil later this year.
He said: "Labour demand will be hit by the increase in employers' National Insurance contributions in April."
"In addition, the workforce should start to grow at its typical pre-Covid rate soon, as immigration recovers and some people who stayed in education or left the labour market due to Covid return."