Brits’ Living Standards Falling

Living standards in Britain will stay squeezed, economists warn, as data out this week is expected to show inflation resumed its upwards march in July. Office for National Statistics figures are tipped to record that inflation, as measured by the consumer prices index, rose by 0.1 percentage points to 2.7% in July.

Since October 2015, inflation has surged from -0.1% and in May hit a five-year high of 2.9%. It then surprised markets by slipping back to 2.6% the following month on the back of lower petrol prices, Yahoo reported.

While inflation is forecast to rise again, it is thought ONS data on Wednesday will show that wage growth has stalled at 1.8%. Economists warn that with inflation set to climb further, due to energy price hikes, rising food costs and stagnant wages, the squeeze on living standards will continue.

Investec chief economist Philip Shaw said: “Inflation has not reached its peak yet, we think CPI will hit 3% in the next two to three months. It’s fairly well documented that EDF Energy has increased its energy prices, which will feed into the numbers, while food-price inflation is accelerating. The squeeze on incomes is still on.”

Capital Economics UK economist Ruth Gregory said: “This week’s inflation and labor market figures are likely to reveal that the real pay squeeze intensified in June.” The ONS economic data is also expected to show that the unemployment rate remained steady at 4.5%, its lowest level since July 1975.