Slip in pay growth as living standards 'mini boom' comes to an end
The UK's mini living standards "boom" of recent years has ended, with income growth plunging to just 0.5%, a report will warn this week.
Research by the Resolution Foundation found household income is growing at a "subdued" rate, following rises of 3% in 2014/15 and 1.5% in 2015/16.
The think tank's annual living standards audit, being published later this week, will show low inflation, more jobs and increases in pay, drove a mini boom between 2014 and the start of 2016.
But inflation is on the increase and is not being matched by pay rises, the study will show.
The Foundation adds that with inflation set to continue rising over the rest of 2017, and with welfare cuts only just starting to be rolled out, household income growth could further weaken in the coming years, unless action is taken.
Stephen Clarke, economic analyst at the Resolution Foundation, said: "After a tight squeeze during the crisis, working age households have enjoyed a living standards mini-boom in recent years.
"The combination of historically low inflation, record employment and a long overdue return to decent pay rises helped power the strongest income growth in over a decade between 2014 and the beginning of 2016.
"But fast rising inflation this year has brought this all too short mini-boom to a sharp halt as pay rises have not kept up.
"While there's little that the Government can do to stop rising inflation eating into people's living standards this year, there is still plenty of scope to boost pay packets and get employment rising again.
"Closing the large jobs gaps that still exist across big cities like Birmingham and Liverpool would boost household incomes and help send Britain to the top of the global employment league.
"And of course tackling Britain's chronic productivity problems holds the key to maintaining decent pay growth in the years ahead."