Looking back to the report earlier here, growth in regular pay i.e. ex bonus was 6.7% in the three months from October to December last year - marking the strongest growth rate seen outside of the pandemic period. That said, after adjusting for inflation, regular pay in real terms is seen declining by 2.5% - which is just slightly smaller than the record fall of 3.0% in the three months from April to June last year.
Meanwhile, total pay in real terms fell by 3.1% on the year and is the largest fall since the drop seen in the period of February to April 2009.
This highlights the toll that high inflation is having on the economy and why households are being squeezed so hard amid the cost-of-living crisis in the UK. That is also the reason why worker strikes are on the rise across the country as the people are finding that the price increase in their daily expenses is largely outweighing any form of pay increase for the moment.
There is also an element of a feedback loop here, as a quicker pace of pay growth will only bolster further signs of inflation in the economy. That will just add to the headache for the BOE as they look to want to slow down on the pace of rate hikes.
