Are you feeling richer? Here’s the data that says you should be

We’re getting better off, according to the figures

Last week we reported that inflation has hit an all-time low of 0.5%. George Osborne lauded it as good news for ordinary families, and putting aside concerns about the economy, he’s totally right.

Wages are now growing at their fastest rate in two years, taking inflation into account.

They’re nowhere near the levels we had before the recession, but wage growth increased from 1.6% to 1.8% in the three months to November 2014.

This means as a workforce, because of low inflation, we should be feeling a tiny bit richer than we were earlier at the beginning and middle of last year.

The growth in workers’ wages is the fastest rise since mid-2012, but still 8% lower than before the financial crisis.

While talking about the economic recovery of late, we’ve welcomed increases in employment and GDP, but pay has always lagged behind.

Pinch of salt

However (why is there always a “however”?)… the wage growth figures could be misleading.

That’s because they don’t take into account the earnings of the increasing number of people who are self-employed – people who have taken the biggest hit on earnings.

Think-tank the Resolution Foundation said it estimated the fall in the average wage since the recession to be 20-30% deeper than what the ONS figures show.

Also, it’s worth remembering that we’re only seeing an increase in wage growth now because inflation is so low.

If inflation was at the targetted 2%, average wages would actually be getting smaller in real terms.

Do you feel better off? Let us know on Facebook or in the comments below.

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Readers' comments (1)

  • Yes. And if you cut both my legs off then gave me one false leg, I would feel "more mobile" than when I had no legs at all.

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