Although wages grew in Q4 2021, total and regular pay fell year on year by 0.1% and 0.8% respectively when adjusted for inflation.
According to the Office for National Statistics, total pay – which includes bonuses – grew by 4.3%, while regular pay grew by 3.7%.
But with the Consumer Prices Index (CPI) rising from 3.8% in November to 5.4% in December 2021, wage gains were largely negated.
Latest figures estimate inflation, as measured by the CPI, rose to 5.5% in January 2022 – more than double the Bank of England’s 2% target.
The central bank predicts inflation to peak at 7.5% this year and suggested workers show “restraint” in wage negotiations to stem inflation.
From 1 April 2022, the national living wage will increase by 6.6% to pay £9.50 an hour for over-23s.
Hannah Slaughter, senior economist at the Resolution Foundation, said:
“While some policymakers are rightly worried about accelerating nominal wages boosting UK inflation, they should also be worried about the UK simultaneously experiencing the tightest real-wage squeeze in generations.”
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