Wages rising faster than prices for first time in a year

THE squeeze on family finances is finally over after wages began rising faster than prices for the first time in a year, experts revealed yesterday.

In a boost to millions of households, the Office for National Statistics said wages were 2.8 per cent higher in the three months to January than a year earlier.

That represents the biggest pay rise since September 2015 – and came just a day after the ONS revealed inflation had fallen to 2.7 per cent.

The ONS also said employment was at a record high of 32.25million, with unemployment at a 43-year low of 4.3 per cent – just half the jobless rate in the eurozone.

The figures were seized on by Chancellor Philip Hammond as a sign that the economy was in rude health. He said: ‘With inflation falling and the highest wage growth in over two years, people are starting to see more money in their pockets.’

Private-sector pay rose by 3 per cent in the three months to January – the biggest increase since November 2016, while public-sector wages were up by 2.1 per cent, a rate not seen since late 2012.

Stephen Clarke, senior economic analyst at the Resolution Foundation think-tank, said: ‘Britain’s 12-month pay squeeze has

‘More money in their pockets’

finally ended, though public-sector workers will have to wait until settlements are agreed across the NHS, schools, the police and other parts of the public sector.’

Workers will receive a further lift next month when the National Living Wage rises from £7.50 an hour to £7.83 for those aged 25 and over, adding £600 to the annual pay of a full-time worker.

The tax-free personal allowance – the amount people earn before paying income tax – will also rise from £11,500 to £11,850 next month, having been £6,475 in 2010.

The ONS report showed employment had risen by 402,000 in the past year, and nearly 500,000 since the Brexit vote.

The figures make a mockery of pre-referendum warnings from the architects of Project Fear that voting for Brexit would cost 800,000 jobs. Suren Thiru of the British Chambers of Commerce said: ‘The labour market remains a major bright spot for the UK economy.’

The ONS also said taxpayers were paying more than £1billion a week to service Britain’s ballooning national debt, which stands at £1.76trillion.