Commenting on the latest ONS labour market data, Kevin Brown, savings expert at financial mutual Scottish Friendly, says
“Struggling real wage growth will continue to disappoint many households as improvements in spending power are now marginal at a time when everyday living costs remain high (1).
“Wage growth has already slowed considerably, while the labour market continues to grapple with employers' reluctance to recruit amid elevated costs (2). Furthermore, rising energy and fuel prices linked to the Middle East conflict threaten to push inflation higher again (3), potentially putting even greater pressure on household finances.
“This all leaves the Bank of England facing a difficult decision in November, with weak real wage growth highlighting the pressure on consumers. Tomorrow's inflation figures likely to play an important role in determining whether policymakers raise interest rates when they next meet.
“For households, the concern is that purchasing power could come under further pressure if inflation continues to accelerate, particularly if higher borrowing costs add to the squeeze on already stretched budgets.
“Making sure savings are earning a competitive return after inflation, building a financial buffer where possible and considering longer-term investing where finances allow remain sensible ways for many households to protect their finances.”
Source (1): https://global.morningstar.com/en-gb/economy/will-uk-inflation-rise-35-this-week
Source (3): https://global.morningstar.com/en-gb/economy/will-uk-inflation-rise-35-this-week