UK inflation slows to 17-month low of 6.8%
British workers would need a £3,000 pay rise in order for their salaries to keep pace with rising inflation, according to experts.
Investment platform easyMoney analysed historic changes to inflation and the average salary in the UK to determine the wage growth needed to beat the cost-of-living crisis.
Unfortunately, employees would need a sizable increase to mitigate the impact of the inflation-hiked prices for goods and services.
According to easyMoney’s data, the average salary dropped by 0.7 percent to £31,437 in 2021 while inflation rose by 2.6 percent.
The following year, average wages jumped by 6.3 percent but inflation reached a high of 9.1 percent.
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Based on the current trajectory of the rate of inflation for 2023, easyMoney is betting on another year-on-year CPI rate increase of around nine percent, but this is subject to change.
In order to match this increase, the average salary in the UK would have to increase by £2,992 to reach £36,394.
As it stands, the latest rate of CPI inflation for the 12 months to July 2023 eased to 6.8 percent.
For wages to keep pace with this figure, salaries would need to be raised by at least £2,271 for Britons to be left unaffected.
Experts are sounding the alarm over the damage being inflicted on peoples’ personal finances due to the failure to successfully manage the cost of living crisis.
Jason Ferrando, the CEO of easyMoney, highlighted the “financial stress” the country is currently facing.
He explained: “Rising inflation is reducing the spending power of the pound and making everyone in the UK worse-off.
“On top of that, wage growth simply isn’t keeping pace, making the situation even worse.
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“With the economy as it is, many businesses and employers are reluctant to give sufficient pay rises because they’re already concerned about surviving this period of financial stress.
“As such, those who are lucky or savvy enough to have some savings squirrelled away might want to look at using it to invest.
The finance expert noted there are still ways for people to make their money go further despite living in a cost of living crisis.
Mr Ferrando added: “Interest rates are climbing and while not every financial institution is passing this benefit onto savers, there are many avenues that are providing strong returns that could go some way towards easing the pressures of low pay and high inflation.”
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