Living standards have been falling for a year as inflation eats into family budgets.
Real disposable income – the money households have to spend, taking into account the rising cost of living – fell by 0.5 per cent between July and September, according to the Office for National Statistics (ONS).
This was the fourth consecutive quarter that living standards have slumped, and means Britons’ spending power has now tumbled by 2.8 per cent in a year, with further falls expected.
Real disposable income – the money households have to spend, taking into account the rising cost of living – fell by 0.5pc between July and September
The ONS said the UK economy shrank 0.3 per cent in the third quarter of the year, worse than the 0.2 per cent initially reported.
It is likely to mark the UK falling into a recession, defined as two consecutive quarters of contraction, as purse strings tighten.
UK output is 0.8 per cent below where it was when the pandemic hit.
And separate data from the ONS showed that 61 per cent of households in the most deprived areas were buying less food compared with last year, whereas it was 44 per cent in better-off areas.
Chancellor Jeremy Hunt said that ‘getting prices down so people’s wages go further is my top priority’.
He added: ‘High inflation driven by Putin’s invasion of Ukraine is slowing economic growth across the world. No country is immune, least of all Britain.’
Meanwhile, accountants PwC predicted that real wages would fall to 2006 levels, meaning French workers would overtake UK counterparts as the fourth-best paid workers in the G7 group of nations.
Inflation, which hit a 41-year high of 11.1 per cent in October, has eroded spending power.
Wage growth has paled in comparison to the rise in prices caused by supply chain chaos and soaring energy bills.
By next year, PwC thinks the average weekly food shop will cost £100, double that of 2000. The UK is now widely expected to slide into a recession.
