What does the chart show? The blue line represents the percentage change in average weekly earnings (excluding bonuses) compared to the same month the previous year. The red line shows the percentage change in the CPI measure of inflation, also compared to the same month the previous year.
Why is the chart interesting? If prices are rising at a faster rate than wages, it means that in real terms, we are getting relatively poorer. This has been a feature of the UK economy since June 2008, and peaked in September 2011 when the CPI rate of inflation reached 5.2% while wages were only growing by 1.8%. Last summer it looked like the two might finally cross, but since then inflation has edged up while wage growth has fallen away dramatically. In February, the annual percentage growth of average weekly earnings was just 0.6% (compared to price increases of 2.8%), the lowest point since records began in 2001. We've been getting poorer in real terms for almost 5 years now, and unfortunately that doesn't look like changing any time soon.
The ERC Chart of the Week is updated every Wednesday.
Wednesday 8th May
18:30 at the Royal Overseas League, London
Mark Schneider
President, College Measures
"Is Higher Education Worth the Cost?"
With panellists Nicola Dandridge (CEO of Universities UK) and Jacque Mallender (Founder and Director of Matrix Knowledge)
For tickets and more information visit the ERC website.
IN OTHER NEWS
A new paper has raised doubts about Reinhart and Rogoff's famous study which concluded that countries with high debts have historically suffered low growth, pointing out that a mistake in their spreadsheet led to them missing out key data.
Last week, Tom Chatfield spoke to the ERC about Bitcoins. He has since published an interesting article on his website on the topic, which is well worth a read.
ON THE ERC WEBSITE
Following the news that inflation remained at 2.8% in March, we have updated our economic prediction competition. LSE's Professor Ethan Ilzetzki is now leading in the official university competition, and Jeremy Warner has climbed in to first place in the public competition. You can find out more information on our website.
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