The Office for National Statistics issued its latest survey on average weekly wages this morning. I offer two key charts here:
That looks reassuring. Except, of course for the fact that first of all by no means everyone gets bonuses, so the regular pay data is much more important, and second this is the nominal pay rise, ignoring inflation. Taking inflation into account this is the result:
As is now very apparent the regular real pay of people in the UK is now in negative territory when inflation is taken into account, and bonuses are not enough to compensate for that inflation.
Three things follow. First, we are not going to get demand-pull inflation in that case because most people will not have the cash to do that pulling. Only the wealthy have, which is why they should be targeted now with significant tax increases on the returns from wealth and investment.
Second, borrowers are already seeing their real earnings fall before any interest rate rises from the Bank of England.
Third, the Bank of England is deliberately making matters worse for those on lower earnings by seeking to tackle demand-pull inflation with interest rate rises when that demand-pull inflation does not exist and all that can follow from interest rate rises is more misery and more better-off people. They are literally doing the exact opposite of what is required.
When will people read the data and act on it? I wish I could answer that question.