Britons' wages after inflation rose at their slowest pace in almost three years in the three months' through February, data showed Wednesday, adding to signs that Britons are facing a living standards squeeze despite a tightening labor market.
Total pay, which includes bonuses, when adjusted for inflation, increased by just 0.2% between December and February from a year earlier, the lowest growth rate since August to October in 2014, the ONS said.
However, the CPI for March remained lower than analyst expectations, who had forecast a one per cent gain, thus casting doubts on the strength of domestic demand.
The growth rate, nearly on par with market expectations, quickened from an increase of 0.8 percent in February. In February, it fell 0.2% from the month before.
ONS deputy national statistician Jonathan Athow said: "Food, drink and clothing prices all rose in March".
"Involuntary part-time and self-employed workers, the threat of future job losses due to automation, demographic changes, all work in the direction of leading to less upward wage pressure for a given level of unemployment", Gertjan Vlieghe said in a speech last week.
The slowing pace of remonetisation, or pumping new Rs 500 and Rs 2,000 notes into circulation, during March to replace the scrapped Rs 500 and Rs 1,000 notes in November, helped inflation to stay within 4% in the financial year ending March 2017.
Unilever wanted Tesco to raise the price of Marmite to offset an increase in inflation but the supermarket didn't want to deter its customers.
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"The CPI also will be boosted over the next two months by further utility price rises".
In March, the prices of milk and milk-based products surged by 4.69 per cent.
Sterling rose momentarily following the announcements before slipping back to a 0.1% drop against the United States dollar at 1.241, and a 0.1% fall versus the euro at 1.170.
Nick Dixon, Investment Director at Aegon, commented: "With inflation surpassing the Bank of England's target for a second month running savers will begin to feel the pinch as inflation erodes the value of their hard earned cash and this poses a particular threat to pensioner income".
"The continued weakness of core wage growth bolsters the view of the majority of monetary policy committee members that interest rates do not need to rise this year in order to combat inflation".
"This is especially true given that wage growth is unlikely to keep up with the elevated inflation levels".
"We can also expect notable increases in transport services, particularly airfares, in April and prepare for inflation move significantly higher in the months ahead, which will slow consumer spending", Ramsey said.