Real wages — inflation-adjusted wages for workers — fell 2.8% between March and May compared to the same period last year, according to data released Tuesday by the Office for National Statistics.
This is the fastest decline since the ONS began keeping records in 2001.
UK consumer prices hit a 40-year high of 9.1% in May, the highest among the leading G7 economies, and are forecast to top 11% later this year despite a series of interest rate hikes.
Grocery bill inflation was nearly 10% in the four weeks ending July 10, according to research firm Kantar data released Tuesday. This means Britons can expect to spend an extra £454 ($545) this year on food and essentials.
Boris Johnson’s government has pledged £400 ($480) in grants per family to help millions of people who are struggling to pay their electricity bills. He also bowed to pressure last month and unveiled a £5 billion ($6 billion) tax on oil and gas windfalls.
High inflation, coupled with disruptive Brexit policies, has undermined the country’s growth. Last month, the Organization for Economic Co-operation and Development predicted that the UK economy was heading towards stagnation with zero GDP growth projected for 2023. This will be the worst result in the G7 next year.
The pound sterling has also fallen this year, shedding 11% of its value against the US dollar, which is likely to make importing goods more expensive.
But there is one bright spot. Preliminary data from the ONS showed that recruitment continued at a rapid pace last month, with the number of people on payroll up 3% year-over-year.
– Mark Thompson contributed reporting.