THE United Kingdom’s unemployment rate rose back to 4% in the three months to the end of May, official data showed today, as the economy struggles with stubbornly high inflation.

The rate increased from 3.8% in the three months to the end of April, the Office for National Statistics (ONS) said in a statement.

It was back at 4% for the first time since the start of 2022. Analysts’ consensus had been for unemployment to remain at 3.8%.

Despite the rise, finance minister Jeremy Hunt said Britain’s “jobs market is strong with unemployment low by historical standards”.

ONS said pay excluding bonuses had risen at record levels.

“Due to high inflation, however, the real value of weekly earnings is still falling, although now at its slowest rate since the end of 2021,” said Darren Morgan, director of economic statistics at ONS.

In a keynote speech late yesterday, Hunt insisted there could “be no sustainable growth without eliminating the inflation that deters investment and erodes consumer confidence”.

UK annual inflation has eased in recent months but remains close to 9%.

This is far above the Bank of England’s 2% target, triggering numerous interest rate hikes by the central bank.

“UK inflation is already running far hotter than policymakers had hoped, and price pressures will struggle to abate any time soon so long as earnings continue to grow at the current scorching pace,” said Matthew Ryan, head of market strategy at Ebury.

ONS revealed that average regular pay, not including bonuses, was 7.3% higher in the three months to May compared with the same period one year earlier.

While Bank of England governor Andrew Bailey and Hunt call for pay restraint, thousands of public and private-sector workers continue to strike in a push for wages rises that keep up with inflation. – AFP, July 11, 2023.