Rising inflation means Britain is set for a longer, deeper pay squeeze 13 June 2017 The latest rise in inflation will deepen Britain’s pay squeeze, while further falls in sterling could add further inflationary pressures in the coming months, the Resolution Foundation said today (Tuesday) in response to the latest inflation figures. CPIH increased from 2.6% to 2.7% in May, while CPI increased from 2.7% to 2.9%. The Foundation notes that nominal pay has grown by 2% on average over the last three years. It expects ONS figures out tomorrow to confirm that real pay growth fell to -0.5% in the three months to April. Stephen Clarke, Economic Analyst at the Resolution Foundation, said: “The latest rise in inflation adds further pressure to already shrinking pay packets. The uncertain political environment, coupled with Brexit negotiations beginning in six days’ time, is already having an impact on sterling and could create further inflationary pressures down the track. “The latest rise in inflation will be a double blow to low-income working families, who are also seeing their tax credits fall in value as they have been frozen in cash terms. Many will wonder whether the ‘end of austerity’ announced by the Prime Minister last night could mean a softening of the ongoing benefits freeze. “With no sign yet of pay settlements responding to rising inflation, Britain’s renewed pay squeeze looks set to be longer and deeper than many originally expected.”
