Inflation has risen faster than average pay since 2000

By Helen Gradwell

New figures from the Office of National Statistics (ONS) show that from April 2011 to April 2021, average annual earnings rose by 1.4% to £26,500 for full-time workers.

In 'real terms', however, this means that pay has fallen in value - because inflation was higher during the same period (3.5%).

In fact, overall inflation has risen faster than average pay over the last twelve years - since April 2000. In this time, average annual pay for full-time workers has gone from £18,848 to £26,500 - that's a rise of 40%. At the same time, however, inflation has risen faster (43%).

The difference between the rate of inflation and the rate of pay rises has been particularly wide in the last five years. Since April 2007, average prices have risen by 18%, while average annual earnings have increased by 10%.

An expert from All About Money said: "It's clear that pay-rises haven't been keeping up with inflation for some time, and this can make it difficult for families to get by.

"Many households have been struggling with rises in the price of food and energy in particular. If your budget is already pushed to the limit, even the smallest price increase could push you into debt, or make existing debts more difficult to repay.

"That's why, especially during financially difficult times, it's really important to make sure that your budget is as 'streamlined' as possible. Have a good look at what you're spending and see whether there are any areas where you could cut back. It can really help to have emergency savings in place too, so you can dip into them if you get an unexpectedly high bill.

"If budgeting and savings aren't enough, and you're still spending more than you earn every month, it can be easy to take on more debt than you can realistically handle. If you're in this situation, it's best to get expert debt advice as soon as you can. It's likely that if you deal with your debt problems sooner, they'll be easier to resolve."

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