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Rishi Snack’s promise to fix inflation and the economy is under threat by stubbornly strong wage growth that is pushing prices higher.
Inflation for March is due to be released by the National Bureau of Statistics on Wednesday after an unexpected rise in the previous month.
The UK has experienced double-digit inflation since the summer, and the prime minister has pledged to halve inflation this year while growing the national economy and keeping government debt under control.
Wages are rising faster than expected, with the ONS saying average wages rose 5.9% year-on-year on Tuesday. But still, high inflation forces workers to cut real wages, making dangerous wage-price spirals more likely.
The unemployment rate also rose slightly, rising from 3.7% to 3.8%.
Economists have warned that high wage growth will make it more likely that the Bank of England will continue to raise interest rates.
Treasury sources say wages are “sticky” as domestically generated price increases remain high even as global factors such as energy prices begin to ease, hampering the fight against inflation. said it was possible. “The new inflation statistics let us look under the hood so we can see what is happening to core inflation,” they added.
“Halving inflation this year is one of the economy’s top priorities, as rising prices continue to weigh on wages even as unemployment remains at a historic low,” said Prime Minister Jeremy Hunt. It is one,” he said.
A tight labor market has benefited workers and disgruntled businesses, warning that prices must rise to meet rising wages for workers.
UKHospitality’s Kate Nicholls said:
“If the hospitality business had been adequately staffed, it could have contributed more to the government’s goals of economic growth and curbing inflation. It should be enough of an incentive to wake up.”
Len Shackleton of the Institute for Economic Problems added: However, continued rapid inflation means that real incomes are declining. For the time being, economic policy must focus on reducing inflation so that real wages start rising again in the medium term.”
Consumer price inflation rose to 10.4% in February from 10.1% in January. The Budget Responsibility Office forecasts it will drop below 3% by the end of the year, which would make it easier for Sunak to meet his pledge, but the prime minister has warned there is no guarantee this will come to fruition. .