Published: Thu, April 13, 2017
Finance | By Laverne Griffith

United Kingdom jobless rate remains at 4.7% as wage growth stalls

United Kingdom jobless rate remains at 4.7% as wage growth stalls

The Consumer Price Index, a main gauge of inflation, rose 0.9 percent year on year in March, 0.1 percentage points higher than February, the National Bureau of Statistics said today.

Expectations that the RBI will maintain status quo on rates had been fuelled by inflation numbers, with wholesale inflation soaring to over a three-year high of 6.55 per cent in February and retail inflation climbing to 3.65 per cent due to rise in food and fuel prices.

Food prices, the biggest component of CPI, fell by 4.4 percent in March after a 4.3 percent drop in February.

"The result of fast rising inflation in recent months is that Britain's pay squeeze looks set to have returned - six months ahead of schedule", said Stephen Clarke, economist at Resoloution.

'Meanwhile, the inflation rate for electricity, natural gas and other fuels rose to +0.9% from -0.4%, as one supplier increased electricity prices and the anniversary of past cuts in natural gas prices was reached'.

Sterling hit its highest level in over a week against the USA dollar after the figures as investors focused on a slightly stronger-than-expected rate of nominal pay growth.

China's consumer price inflation edged up to 0.9 percent year-on-year, slightly softer than expected and compared with 0.8 percent in February.

However Viktor Nossek, director of research, said three risks remained: a weakening pound, a rising oil price and a significant increase in the non-energy-related components of the index.

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On their own, food climbed 0.6 per cent between February and March, while clothing and footwear prices went up by two per cent over the period compared to a one per cent jump past year.

United Kingdom inflation remained at 2.3% in March, unchanged from February and the second month inflation has surpassed the Bank of England's 2% target, according to statstics from the ONS.

So, despite the tightening of the labour market, the pressure is not feeding through to wages and means growth remained below the 2.3% rate of CPI inflation for a second month.

Similar to previous months, much of the year-on-year surge in producer inflation was largely driven by higher prices of raw materials for steelmaking products such as iron ore and coking coal.

Ian Kernohan, economist at Royal London Asset Management, said: "The later date of Easter this year will have held back prices in March, thanks to the lower air fares".

Those are the lowest figures since 2014, says the BBC.

Nonetheless, the MPC urged caution over a rates hike, with weakened pound since the Brexit referendum already affecting consumers as companies pass down their rising costs.

The number of people in work increased only modestly by 39,000 although the employment rate of 74.6 percent was a joint record high.

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