Wages are finally beginning to catch up with the cost of living as the pressure on motorists and the weekly shop from rampant inflation eases up, official figures showed today.
Average salaries were up 1.8% on a year earlier in the three months to April, the Office for National Statistics said.
Wages are still falling by 1% in real terms because inflation stands at 2.8%, although the gap between salaries and the cost of living is the smallest since November 2009, according to Markit chief economist Chris Williamson.
Williamson said: “Although pay growth continues to run behind inflation, pointing to a squeeze on real incomes, the squeeze has clearly eased, reflecting the combination of falling inflation and faster pay growth, which should help bolster consumer spending.”
Inflation slowed sharply last month thanks to falling petrol and food costs, freeing more income for Britons to spend on the High Street.
Unemployment fell to 2.61 million in the quarter to April, but the more timely indicator of the employment market — jobseeker’s allowance claimants — worryingly rose by 8,100 to 1.6 million in
May when the City had pencilled in a fall.
