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UK inflation rate: where have real-terms wages dropped the most in 2022 - and what does CPI mean?

The average worker is earning £66 less per month in real terms than they were this time last year

Thursday, 19th May 2022, 8:50 am

A UK-wide drop in wages has been felt most starkly in Scotland, where rising inflation has left workers up to 6% poorer than this time last year.

An analysis of PAYE data from the ONS by NationalWorld shows that median pay for employees is down in real terms by as much as £150 per month in parts of the country, as new figures show inflation reached a record 9% in April.

Earnings for self-employed people are not included.

Across the UK, wages in April were down 3% in real terms compared with last year, equating to a drop in income of £66 per month.

Of the 25 areas where real-terms wages have dropped the most, 15 are in Scotland, compared with five each in Wales and England.

This comes as the latest Consumer Price Index (CPI) shows inflation hit 9% in April, the highest in 40 years.

Price rises have largely been driven by increased wholesale energy prices and the knock-on effect on production costs, plus the rise in household energy bills.

The Institute for Fiscal Studies (IFS) has warned that the poorest 10% of households, who spend a higher proportion of their income on gas and electricity, currently face an even higher rate of inflation, around 10.9%.

The Government has said that global factors are driving inflation and warned that it “cannot protect people completely” from the resulting increases in the cost of living.

These are the parts of the UK where wages have dropped most in real terms.

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