UK inflation rose to its highest level in five years, hitting 3 percent in September according to figures released on Wednesday. Wages, which continue to lag the rise in consumer prices, came in at 2.1 percent, the sixth month in a row that workers have seen the real value of their pay packets decrease. The inflation figures, which were released by the UK’s Office for National Statistics on Wednesday, pile further pressure on the Central Bank to raise the interest rate from its current record low of .25 percent. The consensus among analysts is that Central Bank Governor Mark Carney will announce a hike in the rate to 0.5 percent when the bank’s board meets again in November. The fall in the value of the pound since the vote to leave the EU is one of the main driving factors behind the increase in the cost of living, with the ONS citing transport, food and recreation as the main contributors to the rise in September’s prices.
Public sector workers have been especially hard hit by the rising costs due to a pay cap of 1 percent on public sector wages.
“Pay packets are taking a hammering,” said TUC general secretary Frances O’Grady. “This is the sixth month in a row that prices have risen faster than wages. Britain desperately needs a pay rise. Working people are earning less today in real-terms than a decade ago,” she added.
In September the government announced a partial lifting of the pay cap that will see wages for prison officers rise by 1.7 percent and police officers 2 percent. However after inflation this will still see police officers lose £450 a year and prison officers down by £980. Wednesday’s ONS figures also showed the rate of unemployment holding steady at a 42-year low of 4.3 percent, with 94,000 jobs added in third quarter, which is about half the increase recorded in the three months to July.