MNI BRIEF: Inflation Eats Into UK Pay Rises

UK real regular earnings declined 1.0% in the three months to January, the biggest fall since the three months to July 2014, according to data released by the Office for National Statistics Tuesday. Excluding bonuses, real earnings rose by 0.1%. The fall in real earnings would have been worse if discounted by CPI, rather than CPIH. Using the CPI as a discount, real regular earnings plunged by 1.6% in the three months to January.

Total earnings -- before adjustment for inflation -- rose by 4.8%, exceeding analysts’ expectations, from 4.6% in the fourth quarter. Excluding bonuses, earnings rose to an annual rate of 3.8% from 3.7% in the December period. Payroll employment rose by a record 275,000 in February, HMRC data shows. Salaried employment stands 662,000 above the level of February 2020.

But LFS employment fall by 12,000, with older workers continuing to leave the work force, according to ONS officials. Despite the fall in employment, the jobless rate fell to 3.9% — below its pre-pandemic level — from 4.0% in the fourth quarter. The inactivity rate rose to 21.3% from 21.2% in the fourth quarter.