UK consumer inflation rises to 3 ½-year high of 2.7 percent
- Author: Zachary Reyes May 19, 2017,
May 19, 2017, 21:37
At the same time, real wages are decreasing, as average weekly earnings are lagging behind rising inflation.
GDP growth slowed to 0.3 per cent in the first quarter while total hours worked increased by 0.8 per cent.
Average earnings increased by 2.4 per cent in the year to March, just 0.1 per cent up on the previous month and below the latest CPI inflation rate of 2.7 per cent.
It rose from 2.3 percent of March inflation and reached the highest point since September 2013, the Office for National Statistics (ONS) said on Tuesday.
"The economy has surprised on the upside since last summer's referendum, powered by a resilient consumer, but it looks like households are now starting to feel the pinch".
Regular pay adjusted for inflation fell 0.2 percent, the ONS said. Relative to other countries, and relative to the past, this is a standout success.
British households are facing an ever-tighter squeeze on their spending power experts have warned as evidence mounted today that prices are rising faster than incomes.
"Many have pointed to wage growth as the "missing piece of the puzzle". "The last thing Britain needs is another real wage slump".
"Having hovered close to zero back in 2015, inflation has really picked up in 2017, doubling in the last six months alone and now at its highest level for nearly four years", said Matt Whittaker, chief economist at the Resolution Foundation.
"As a result, the forthcoming squeeze on real wages should be nowhere near as severe or prolonged as that seen after the financial crisis".
Although the United Kingdom unemployment rate fell to its lowest since 1975, weekly wage growth slowed to heap further pressure on consumers already battling with rising inflation.
The fall in unemployment also takes the jobless rate closer to the 4.5 percent that the central bank estimates is the level that can be sustained without generating inflation. Annual CPI rose from 2.3% in March to 2.7% in April, while core CPI, jumped from 1.8% to 2.4% - the highest since March 2013.
Slovakia spent the last three years battling deflation, but escaped in December before the CPI pushed to 0.7%y/y in January.
United Kingdom workers saw their real earnings fall in the first quarter for the first time in 2 1/2 years, despite unemployment dropping to its lowest in more than four decades.
"The pick-up in employment growth is encouraging".