Workers in the UK are grappling with the biggest wage drop in the past two decades as rising food and energy prices hit wages enormously.
According to data released Tuesday by the Office for National Statistics, real wages - workers' wages that take into account inflation - fell by 2.8% between March and May compared to the same period last year.This is the fastest decline since the ONS began tracking records in 2001.
Earlier this month, British Prime Minister Boris Johnson stepped down after a series of ethics scandals proved too costly to be wiped out by the government. His successor, who is currently in the process of deciding, faces a wide range of economic and financial challenges. For months, rising global energy and commodity prices, exacerbated by the Russian invasion of Ukraine, helped fuel global inflation. The fifth largest economy in the world is one of the hardest hit of the richest countries in the world.
Consumer prices in the UK hit a 40-year high of 9.1% in May, the highest of the major G7 economies, and are expected to rise more than 11% by the end of the year, despite a series of rate hikes.
And families feel the pressure. Blinding energy and grocery bills have plunged the British into the worst cost of living crisis in decades. The Bank of England predicts disposable income will suffer the second biggest fall this year since records began in 1964.
Grocery bill inflation reached nearly 10% in the four weeks ending July 10, according to data from research firm Kantar released on Tuesday. This means Brits can expect to spend an extra £454 ($545) on groceries and essentials this year.
Energy bills, which rose 54% in April, are estimated at more than £3,000 ($3,603) a year for millions of households in October, according to energy research firm Cornwall Insight. Then the government then adjusts a price cap that caps how much suppliers can charge customers per unit of energy. Boris Johnson's government has promised grants of £400 ($480) per family to help the millions of people struggling to pay their energy bills. She also bowed to pressure last month, unveiling a £5bn ($6bn) tax on the windfall profits of oil and gas companies.
High inflation coupled with damaging Brexit policies have held back the country's growth. The Organization for Economic Co-operation and Development forecast last month that Britain's economy was heading for stagnation, with zero GDP growth forecast for 2023. That would be the worst performance of the G7 next year. The pound has also been under pressure this year, losing 11% of its value against the US dollar, which risks making goods more expensive to import.
But there is a bright spot. Recruitment has continued to pick up speed over the past month, according to preliminary data from the ONS, with numbers up 3% year-on-year.