Real income squeeze gets tighter

Main points

• Growth in Average Weekly Earnings including bonuses (AWE) was 4.8 per cent in the 3 months to January 2022, stronger than the 4.0 per cent that we predicted in February.
• We now forecast private-sector AWE to increase from 5.1 per cent in the 3 months to December 2021 to 7.5 per cent in the first quarter of 2022.
• We continue to expect public-sector AWE growth to stabilise between 2 ½ and 3 per cent until the first quarter of 2022 due to the current policy of moderation in public-sector pay.

"Once again, wages have risen in nominal terms, according to latest ONS estimates. However, when taking the rising prices into consideration, regular pay (i.e., excluding bonuses) is 1.0 per cent lower than this time last year. With developments in Ukraine expected to further boost households’ energy bills, workers should expect an even tighter squeeze on their real income.”

Dr Kemar Whyte, Senior Economist, NIESR

See our previous wage tracker to follow the analysis