The cost of living crunch has tightened its grip on Britain today with pay falling behind price rises for the first time in more than a year.
As households brace for eye-watering energy bill hikes this Spring, it emerged that wage growth was outstripped by inflation in November for the first time since July 2020.
Single-month growth in real average weekly earnings was minus 0.9 per cent for total pay and minus 1 per cent for regular pay – meaning people’s spending power was falling.
Downing Street blamed changes in the global economy, as Boris Johnson and Rishi Sunak desperately seek a way of easing the pressure on families.
However, there was brighter news on the labour market with job vacancies hitting another record of 1.25million as the economy recovers from Covid.
The number of posts available in the quarter to December was 462,000 above the pre-pandemic level, while unemployment in the three months to November was 4.1 per cent – just 0.1 per cent higher than before coronavirus struck.
Staff on payrolls were up by 184,000 between November and December to 29.5million. Redundancies were also at their lowest since 2006, according to the figures from the Office for National Statistics.
Chancellor Rishi Sunak said the data showed the jobs market was ‘thriving’.
The number of posts available in the quarter to December was 462,000 above the pre-pandemic level
Single-month growth in real average weekly earnings was minus 0.9 per cent for total pay and minus 1 per cent for regular pay
The headline CPI rate hit 5.1 per cent in November, with the figure for December due to be published tomorrow
The Prime Minister’s official spokesman said: ‘Real wages are 2.9 per cent above pre-pandemic levels. But we know people are facing pressure with the cost of living.’
‘That’s why we’re taking action worth billions of pounds to help – be it the Universal Credit taper, increasing the minimum wage, supporting households with their bills and freezing alcohol and fuel duty.’
The spokesman added: ‘Globally we are seeing challenges caused by inflation and cost of living, particularly as the global economy emerges from the worst of the pandemic.’
The Financial Times reported that taxpayers’ money could be used to subsidise energy suppliers when wholesale gas prices rise sharply in order to soften the blow on household bills in an effort to address cost-of-living pressures.
The PM’s spokesman refused to comment on the speculation, saying: ‘There’s obviously ongoing policy discussions taking place across government on what’s the right course of action, but beyond that I’m not going to get into speculation.’
It is understood that other options are regarded more favourably by ministers.
ONS director of economic statistics Darren Morgan said: ‘The number of employees on payrolls continued to grow strongly in December, with the total now well above pre-pandemic levels.
‘New survey figures show that in the three months to November, the unemployment rate fell back almost to where it was before COVID-19 hit, and those reporting they’d recently been made redundant fell to their lowest since records began more than a quarter of a century ago.
‘However, while job vacancies reached a new high in the last quarter of 2021, they are now growing more slowly than they were last summer.
‘Following recent rises in inflation, in November real wages fell on the year for the first time since July 2020.’
Mr Sunak said: ‘Today’s figures are proof that the jobs market is thriving, with employee numbers rising to record levels, and redundancy notifications at their lowest levels since 2006 in December.’
The latest data suggested there was little impact on the buoyant jobs market from the spread of the new Covid variant in December and tightened restrictions.
That was in spite of a sharp drop off in trade for many sectors, particularly the services sector, combined with limited Government support.
Figures also confirmed the end of the furlough scheme in September has not led to the once-feared surge in job losses, with the redundancy rate falling to a record low in the three months to November.
Unemployment is now near the level from before the coronavirus pandemic struck
Average weekly earning have continued to recover – but are close to being outpaced by the spike in inflation
Chancellor Rishi Sunak (left with Boris Johnson) said the data showed the jobs market was ‘thriving’
In a sign that the hiring crisis and staff shortages may finally be easing, the ONS said the rise in vacancies slowed down, falling from growth of more than 180,00 in the previous three months.
The ONS said the number of people employed is now 1.4 per cent, or 409,000, above levels seen before Covid.
There were large revisions for the previous month’s data, however, with UK payrolled employee growth now estimated at 162,000 between October and November, rather than the 257,000 first reported.
The latest figures showed unemployment fell 128,000 to 1.38million quarter-on-quarter in the three months to November, while employment lifted 60,000 to 32.5 million.
Average weekly earnings, excluding bonuses, and before the impact of inflation rose 3.8 per cent in the three months to November, compared with a 4.3 per cent rise between August and October.