Inflation falls below average wage increases
Earlier this week new figures showed that average wage increases in cash terms were at record levels. According to the Office for National Statistics (ONS) In April to June 2023, the annual growth for regular pay (excluding bonuses) was 7.8%. This is the highest annual growth rate since comparable records began in 2001. Annual growth in employees' average total pay (including bonuses) was 8.2% in April to June 2023.
However, of course, while these wage rises were below the rate of inflation, that still left people worse off in real terms.
But today we have turned an important corner: new figures show that inflation has dropped to 6.8% which is below the latest average annual figure for wage increases.
Price rises for different goods and services have been running at different rates, and the average income rise figures hides considerable variation from one group of workers to another, so this does not mean everyone is better off.
We urgently need to boost productivity so that the economy can afford to pay people more while completing the task of halving inflation this year and ultimately getting it down to 2%. But at least we can say that the economy is beginning to move in the right direction.