- UK consumer price index hit a 40-year high of 9.1 percent in May.
- The Bank of England predicts that disposable income will fall by the most this year since records began.
- Grocery bill inflation reached nearly 10% in the four weeks ending July 10. High inflation, combined with negative Brexit policies, has stifled the country’s growth
Britain workers are facing the biggest pay cut in more than two decades, as rising food and energy prices eat away at wages.
According to data released Tuesday by the Office for National Statistics, real pay — wages that take inflation into account — fell by 2.8 percent between March and May compared to the same period last year.
This is the quickest drop since the ONS began keeping records in 2001.
UK Prime Minister Boris Johnson resigned earlier this month after a series of ethics scandals proved too costly for the government to ignore. His successor, who is still being chosen, will face a daunting set of economic and financial challenges.
Rising global energy and commodity prices, exacerbated by Russia’s invasion of Ukraine, have fueled global inflation for months. Among the world’s wealthiest nations, the world’s fifth-largest economy has been one of the hardest hit.
Despite a series of interest rate hikes, the UK consumer price index hit a 40-year high of 9.1 percent in May, the highest among the G7 leading economies, and is expected to rise above 11 percent later this year.
And families are feeling the pinch. Energy and grocery bills that are out of control have plunged Britons into the worst cost-of-living crisis in decades. The Bank of England predicts that disposable income will fall by the most this year since records began in 1964.
According to Kantar data released on Tuesday, grocery bill inflation reached nearly 10% in the four weeks ending July 10. This means that Britons can expect to spend an extra £454 ($545) on food and necessities this year.
According to energy research firm Cornwall Insight, energy bills, which increased by 54% in April, are expected to exceed £3,000 ($3,603) per year for millions of households beginning in October. That’s when the government will adjust a price cap that limits how much energy suppliers can charge customers per unit.
Boris Johnson’s government has promised a grant of £400 ($480) per family to assist millions of people who are struggling to pay their energy bills. It also bowed to pressure last month, announcing a £5 billion ($6 billion) tax on oil and gas companies’ windfall profits.
High inflation, combined with negative Brexit policies, has stifled the country’s growth. Last month, the Organization for Economic Cooperation and Development predicted that the UK economy would stagnate, with zero GDP growth in 2023. That would be the G7’s worst performance next year.
The pound has also taken a beating this year, losing 11 percent of its value against the US dollar, making imports more expensive.
But there is one ray of hope. According to preliminary ONS data, hiring continued apace last month, with the number of people on payroll increasing by 3% year on year.
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