What's going on?

Data released on Wednesday showed that for the sixth month in a row, everyday prices in Britain have been increasing faster than paychecks, meaning that the real value of people�s wages is still declining�

What does this mean?

During the three months to the end of August, wages increased by 2.1% compared to the prior three-month period. This was higher than economists had expected, but when compared with the 3% inflation recorded in the UK last month, it means that the purchasing power of everyday people is still shrinking.

The real culprit here is inflation: following the Brexit vote, the value of the pound declined. This means that it costs more for the UK to import stuff from abroad � and Britain imports a lot. The relatively high inflation that Britain is now experiencing sets it apart somewhat from other developed economies, where workers are experiencing similar low wage growth (by historical standards), but aren�t seeing the value of their paychecks decline.

Why should I care?

The bigger picture: So�why aren�t people asking for bigger paychecks?


There are various theories, but one is likely that this decade�s low productivity growth means that workers haven�t substantially increased the value they add to a company�s earnings, so there is less of an incentive for companies to pay them more. Another potential reason is that there may be more underemployment than the statistics indicate (e.g. contract workers that would rather be working more frequently) � and so there isn�t much upward pressure on wages.

For you personally: Buyer beware…you�re earning less these days!


August marks the sixth month in a row that wages have grown slower than inflation, i.e. the sixth consecutive month that the money you take home was worth less than it was the month before. So you might want to prepare to rein in that spending ahead of the holidays!