The consumer prices index, due on Tuesday, is expected to rise to 2.8% for August, up from 2.6% in July, and close to the four-year high of 2.9% reached in June.
Transport costs are likely to be one of the main drivers of higher inflation, as petrol and diesel have become more expensive in recent weeks.
“For road users, petrol prices are up after the respite given by lower prices over the summer,” said James Brown of consultancy firm Simon-Kucher. “Driving to work cost 5% more in August and early September than last year.”
Wages, though, are not keeping pace. City economists predict that Wednesday’s labour market statistics will show that average earnings, excluding bonuses, rose by 2.2% per year in the three months to July. This would be an improvement on the 2.1% recorded a month ago, but still means that real wages are falling.
Analysts at Investec predict the UK unemployment rate could drop to 4.3%, the lowest in over four decades. But they caution that there are still no sign that wage growth is taking off.
Business advisers BDO have warned that the rise in employment has not yet delivered higher productivity either.
Peter Hemington, a partner at BDO, explained: “UK employment law is sufficiently elastic to give employers the comfort that they can flex workforces quickly as market conditions change.
“However, although new employment in the UK has increasingly consisted of proper, full-time jobs, these seem often to be low skilled and low paid.”
Union leaders will renew their calls for the government to lift the 1% pay cap on public sector workers, when they gather for the Trades Union Congress in Brighton.
The Unison general secretary, Dave Prentis, said Theresa May’s administration was “out of step” with the national mood.
“After seven long years of pay freezes and limits on their wages, ambulance workers, school meals staff, police and community support officers and other public service employees all deserve so much better,” Prentis said.
Read more at theguardian.com
