LONDON, England: As surging food and energy prices are eating up a growing proportion of their wages, workers in the UK are struggling with the largest decrease in real pay in more than two decades.
According to data released this week by the Office for National Statistics, real pay, which takes inflation into account, dropped by 2.8 percent between March and May, compared to the same time last year, the most rapid decline since the Office for National Statistics began keeping records in 2001.
Rising international energy and commodity prices, worsened by Russia’s invasion of Ukraine, have intensified global inflation, which has hit the world’s fifth-largest economy especially hard.
In May, UK consumer prices rose 9.1 percent, a 40-year high and the highest increase among the G7 leading economies. Despite a series of interest rate hikes, prices are still expected to rise above 11 percent later this year.
The resulting increase in energy and grocery bills have thrown the country into its worst cost-of-living crisis in decades, with the central bank, the Bank of England, predicting that this year disposable incomes will experience their second largest decline since record keeping began in 1964.
According to data from research firm Kantar, grocery bill inflation hit nearly 10 percent in the four weeks ending on 10th July, meaning that people in the UK can expect to spend $545 more on food and essentials this year.
Energy research firm Cornwall Insight also said that energy bills, which rose by 54 percent in April, are estimated to go beyond $3,603 per year for millions of households.
Last month, Boris Johnson’s government bowed to pressure and introduced a $6 billion windfall tax on the profits of oil and gas companies. It also promised grants worth $480 per family, to help those struggling to pay their energy bills.
Also last month, the Organisation for Economic Co-operation and Development forecasted that the UK economy will stagnate, with zero growth in GDP predicted for 2023, the worst expected performance in the G7.
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