UK average earnings rose again for the second time in over a year but unemployment continues to increase, according to the latest official figures.
Basic pay excluding bonuses, and average weekly earnings, rose at an annual rate of 5.6% in the three months to November, the latest figures from the Office for National Statistics (ONS) reveal.
This was up from a rate of 5.2% in the previous month.
But the figures also revealed that unemployment has continued to rise.
The ONS said the rate of unemployment rose from 4.3% to 4.4%.
The figures were the first to take into account possible early reaction to the Budget.
They could suggest some employers were eager to hold onto staff by increasing their pay at a time when others were keen to cut costs.
It comes after news that 3 million workers will get a pay rise of £1,400 a year from April.
Chancellor Rachel Reeves confirmed that the Government will boost the National Living Wage by 6.7% in the Budget.
The Government also hiked the rate of employer National Insurance Contributions from 13.8% to 15%.
The decision has raised fears that the hike in contributions on top of the minimum wage increase could lead workers to be laid off or wages to stagnate as businesses absorb the added costs.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
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