UK inflation has soared. Next Wednesday’s figures could show that consumer price index (CPI) inflation jumped to over 8 per cent in April – its highest since 1991 – due largely to a huge rise in gas and electricity prices.
Inflation is not confined to consumer prices, however; producer price inflation for both output and input prices the same day will also increase thanks mainly to higher raw materials costs. Nor of course is it confined to the UK; official eurozone data the same day will confirm that CPI inflation in the region is 7.5 per cent.
Wages, however, are not keeping pace with prices. Tuesday’s figures will show that median monthly pay has risen by around 6 per cent in the last 12 months, while average weekly earnings are up around 5.5 per cent. The latter will be inflated by City bonuses. For many people, such as in construction or the public sector, pay growth is even weaker than this. Wages, then, are falling in real terms – and for many workers, by a lot.