UK wage growth lags inflation for first time since mid-2014

Wage growth is lagging behind inflation for the first time since mid-2014, official figures show.

Average weekly earnings excluding bonuses increased by 2.1%. in the three months to March, while inflation rose by 2.3% in the year to March 2017.

In the first three months of this year, wages fell by 0.2%.

Meanwhile, the number of unemployed people fell by 53,000 to 1.54 million in the three months to March, said the Office for National Statistics.

The UK unemployment rate has fallen to 4.6%, its lowest in 42 years,

The jobless rate has not been lower since the June to August period of 1975.

The employment rate, the proportion of 16 to 64 year olds in work, was 74.8%, the highest since records began in 1971.


Ben Brettell, senior economist at Hargreaves Lansdown, said: "With inflation forecast to carry on rising - Bank of England policymakers predict inflation will peak at a little below 3% in the fourth quarter - household budgets look certain to be squeezed further in the coming months."

Dennis de Jong, managing director at, echoed this sentiment: "Alarm bells will be ringing for Britons with wages continuing to fall. This could cause a headache for the government over the standard of living in post-Brexit Britain in the run up to next month's general election."

Analysis: Jonty Bloom, business correspondent

Image copyright PA

The UK economy is great at creating jobs, but not very good at paying people well.

That's because our productivity is falling: in the first three months of this year, it fell sharply by 0.5%, taking us back to the same level as in 2008.

Productivity is measured by dividing economic output by the number of hours we all work. It should increase steadily as we get better educated, trained and equipped - in short, more efficient at our jobs.

But it is in the doldrums again and that matters. If we don't make more, we can't afford to pay more and we are making no more per hour now than we did nine years ago.

Between January and March, the number of 16 to 64 year old women in jobs was 70.2%, also the highest rate since records began.

Meanwhile 79.5% of 16 to 64-year-old men were in work, the highest since 1991.

The ONS attributed the rise in the rate of women's employment, in part, to changes to the State Pension age for women, which has meant fewer women retiring between 60 and 65.

'Consistently higher'

The unemployment rate among 16 to 24 year olds was 12.5%, down from 13.7% in January to March of last year.

"The unemployment rate for those aged from 16 to 24 has been consistently higher than that for older age groups," said the ONS.

In late 2011 youth unemployment reached a peak of 22.5%, and even at its lowest in 2001 it was running at 11.5%.

Between early 1992, when comparable records began, and this year, the proportion of young people in full-time education jumped from 26.2% to 44%.

The number of UK nationals working in the UK increased by 179,000 compared with January to March of last year to stand at 28.31 million.

The number of non-UK nationals working in the UK increased by 207,000 to a record 3.55 million, meaning 11.1% of all people working in the UK are non-UK nationals.

More on this story