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Rate of wage growth in north now outstrips inflation, official data shows

The rate of bread inflation stood at 11.6 per cent in July, down from 17.6 per cent in June.
The rate of bread inflation stood at 11.6 per cent in July, down from 17.6 per cent in June. The rate of bread inflation stood at 11.6 per cent in July, down from 17.6 per cent in June.

The rate of wage growth in the north rose faster than the rate of inflation during July, official government data suggests.

The UK’s Office for National Statistics (ONS) said Consumer Prices Index inflation (CPI) was 6.8 per cent last month, down from 7.9 per cent in June.

On Tuesday, the Northern Ireland Statistics and Research Agency (Nisra) published data from HMRC, which showed the average monthly earnings in the north stood at £2,103 in July, 7.5 per cent higher than earnings in July 2022.

The ONS said the 6.8 per cent CPI rate released on Wednesday morning was the lowest since February 2022.

Core inflation, which excludes things like food prices, energy and alcohol, stood at 6.9 per cent last month.

Despite inflation easing, it still represents a sharp increase in the cost-of-living for households, and is significantly above the UK Government's 2 per cent inflation target.

Food prices increased by 14.9 per cent in July against the same month last year, easing back from 17.3 per cent growth for June.

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Ulster Bank’s chief economist Richard Ramsey said food and alcoholic drinks were the only categories captured within the Consumer Price Index showing double digit rates of inflation during July.

But Mr Ramsey said basic food staples such as bread, milk and butter, all showed strong signs of easing price growth.

Food & non-alcoholic drinks is the only main CPI category (1 of 12) with double-digit CPI at 14.8%. Price of food staples easing E.g. Bread 17.6% Jun to 11.6% July Fish 19.0 to 15.1% Low fat milk 18.2% > 3.7% y/y Eggs 19.7% > 16.5% Meat 11.4% > 9.8% Butter 23.1% > 15.6% — Richard Ramsey (@Ramseconomics) August 16, 2023

The ONS said the easing rate of inflation last month was driven by falls in the price of gas and electricity as the reduction in the energy price cap came into effect in Britain.

Northern Ireland operates in a separate energy market.

Analysis by the Northern Ireland Consumer Council shows fuel prices on the rise here this month.

The average price of 500 litres of home heating oil last week (£355) was around 25 per cent higher than the first week of July (£284). Despite the increase, the price of home heating oil is still around 15 per cent lower than the same week in 2022.

Road fuel prices are also up by around 5 per cent on last month. The Consumer Council said the average price for diesel in the north last week rose to £1.441 per litre, with petrol rising to £1.43.

Government data published on Tuesday, put the UK wide average this week at £1.5037 for diesel and £1.4777 for petrol.

Living standards think tank Resolution Foundation said the Bank of England faces a tough task to tame inflation despite July's fall in the CPI.

James Smith, research director at the Resolution Foundation, said: "Inflation has fallen rapidly over the past six months, but the UK still has the highest rate in the G7 and the Bank faces a daunting task in further taming price pressures.

"Accelerating pay growth will make even the Prime Minister's promise to halve inflation hard to meet, let alone the Bank's mandate of reducing it to 2 per cent.

"The UK has experienced the third largest price pressures of any advanced economy since the pandemic.

"This highlights just how painful this cost of living crisis continues to be, and how unwise it would be to meddle with policies like benefits uprating that are designed to protect families from price pressures like this that are beyond their control."