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A potentially ominous sign for the British consumer.
UK wages have grown at their weakest pace in seven months, raising concerns that households are already facing a squeeze on their living standards as inflation climbs to three-year highs.
Average weekly earnings, excluding bonuses, rose 2.2 per cent in the three months to February, according to the Office for National Statistics, down from 2.3 per cent and the worst performance since the aftermath of the UK’s EU referendum last summer.
Despite making impressive employment gains since the financial crisis, Britain’s wage growth has remained subdued over the last eight years. This disappointing performance is expected to come into sharper relief as inflation has accelerated sharply in the aftermath of the referendum and should breach 3 per cent over the next 12 months, according to the Bank of England.
A weak pound and climbing food prices pushed up annual consumer price growth to 2.3 per cent in February – the highest inflation rate since September 2013.
Economists expect the climbing cost of living, coupled with slipping earnings growth, to pinch the consumer spending that has helped drive the UK economy since the Brexit vote.
The February figures show that “the real growth rate in pay has tailed off to just above zero”, according to David Freeman, senior statistician at the ONS.
Britain’s overall unemployment rate remained unchanged at a 12-year low of 4.7 per cent in the three months to February, said the ONS. The employment rate, which measures the total number of people in work, matched its joint highest on record at 74.6 per cent.