” data-hero=”” height=”726″ i-amphtml-layout=”responsive” i-amphtml-ssr=”” layout=”responsive” src=”https://static.independent.co.uk/2022/01/18/07/8928ccaf53940b89899a0fce01651b31Y29udGVudHNlYXJjaGFwaSwxNjQyNTUwMTcw-2.64698406.jpg?quality=75&width=982&height=726&auto=webp” width=”982″>
UK workers took a pay cut in the final three months of last year the soaring cost of living outstripped wage increases, official figures show.
The Office for National Statistics latest release made grim reading for British households, who face the biggest squeeze on living standards in decades.
Total pay growth rose to 4.3 per cent for the quarter to December – from 4.2 per cent for the three months to November – but continued to lag behind inflation, which surged to a near 30-year high of 5.4 per cent in December, propelled by huge increases in energy and fuel costs.
Economists expect inflation to spike further to around 7 per cent by April when millions of households will be hit with a 54 per cent jump in their energy bills. Borrowers face a further squeeze after the Bank of England raised interest rates this month, with further hikes predicted.
The total number of people in work dipped by 38,000 in the latest quarter, although the number of payrolled employees rose by 108,0000 to 29.5 million.
The unemployment rate remains low at to 4.1 per cent but there are around half a million fewer people in work than there were before the pandemic, due to a large decline in the number of self-employed.
Officially, unemployment only refers to people who are out of work and actively seeking a job. It does not include people who are “economically inactive” – those who aren’t working and are not looking.
The proportion of economically inactive people rose slightly to 21.2 per cent.
Chancellor of the Exchequer Rishi Sunak said: “Our £40bn economic plan has protected our jobs market through the pandemic and it is now healthier than most could have hoped for.
“Payrolled employee numbers are at a record high and redundancies are at an all-time low thanks to our plan for jobs.
“We’re continuing to help more people into work and are providing support for the cost of living worth over £20bn across this financial year and next.”
Sam Beckett, head of economic statistics at the ONS, said: “The number of employees on payrolls rose again in January 2022 and is now well above pre-pandemic levels.
“However, our Labour Force Survey shows the number of people in employment overall is well below where it was before Covid-19 hit.
“This is because there are now far fewer self-employed people.
“The survey also shows that unemployment has fallen again and is now only fractionally above where it was before the pandemic.”