Real pay drops to a near nine-year low

Workers have suffered the biggest fall in their real pay for nearly nine years as the cost-of-living squeeze tightened, according to official figures.

The Office for National Statistics (ONS) said regular pay excluding bonuses tumbled 1.8% in the three months to February, after taking soaring inflation into account – the steepest fall since 2013.

The ONS said that while pay rose by an average of four per cent in the quarter, it was far outstripped by inflation and experts have warned wages will lag even further behind rising prices this year, with inflation expected to rocket in the autumn.

Chancellor Rishi Sunak said the Government was "helping to cushion the impacts of global price rises” but business groups say households and companies are already coming under strain from eye-watering price hikes.

Darren Morgan, director of economic statistics at the ONS, said: "While strong bonuses continue to mitigate the effects of rising prices on people's total earnings, basic pay is now falling noticeably in real terms."

The figures come amid forecasts that inflation – which is already at 6.2%, will peak at nearly 9% this autumn.

The latest data from the ONS also covers the ‘calm before the storm’ period, ahead of April's energy cap rise, council tax bills increase and the national insurance contribution rise.

The UK's economic forecasters, the Office for Budget Responsibility, recently warned that households will suffer the biggest fall in real incomes since records began in 1956, with a drop of more than 2.2% this year.