Sharp inflation rise suggests UK on course for a fresh pay squeeze later this year 17 January 2017 Responding to the latest inflation figures for December, which showed that CPI increased to 1.6 per cent (up from 1.2 per cent in November, and 0.6 per cent in July), Conor D’Arcy, Policy Analyst at the Resolution Foundation, said: “Today’s sharper than expected rise in inflation shows that the ultra-low price rises that consumers have benefitted from in recent years is well and truly over. Inflation has risen from 0.6 per cent in July to 1.6 per cent in December. That’s still low historically, but a significant rise to which wage growth has so far failed to respond. “It will be years until we see the overall economic impact of Brexit, but the one dead cert in 2017 is rising inflation – fuelled by a sharp fall in the pound. With nominal pay only expected to rise by 2.4 per cent in 2017, the risk is we see a fresh pay squeeze with rising prices eating up all pay growth by the end of the year.”
