Friday, 1 July, 2022

UK unemployment edges higher as inflation slams wages

LONDON: Britain's unemployment rate has risen slightly, while soaring inflation is causing the value of wages to fall at the fastest pace in more than a decade, official data showed Tuesday.

Unemployment rose to 3.8 percent in the three months to the end of April, but remained close to a 50-year low as Britain sees record-high vacancies, reports AFP.

That compared with an unemployment rate of 3.7 percent in the first quarter of the year, the Office for National Statistics said in a statement.

ONS Head of Economic Statistics, Sam Beckett, meanwhile noted that "pay in real terms is falling at its fastest rate in over a decade", with UK inflation at a 40-year high.

The jobs data follows official figures Monday showing British economic output declined for a second month in a row in April, weighed down by runaway consumer prices.

"It is possible that this is the very first signs that the weakening in economic activity since the start of the year is filtering through into a less tight labour market," Paul Dales, chief UK economist at Capital Economics, said Tuesday.

However, "that won't be anywhere near enough to prevent the Bank (of England) from raising interest rates on Thursday", he added.

The BoE is expected to raise its main interest rate for a fifth time in a row to cool the pace of price rises.

UK annual inflation rate has soared to nine percent, causing a cost-of-living crisis for millions of Britons.

"With inflation hurtling towards double digit territory, many workers are increasingly finding that their wages are not stretching wide enough to meet the bumper cost of seemingly everything from food to petrol," said Myron Jobson, senior personal finance analyst at Interactive Investor.

The Bank of England is widely expected to raise its key interest rate this week by a quarter-point to 1.25 percent, while some are forecasting a half-point jump.

In the United States, Friday's forecast-beating inflation print has triggered expectations that the Federal Reserve will ramp up the pace of its interest rate increases, heightening fears of a recession.