Fuel and travel costs are pushing prices up again
Thursday 5 November 2026
Inflation has risen to 3.1%, meaning everyday spending is getting more expensive just as household budgets are already under pressure.
Key term
What it means
A pay rise can still leave you worse off if prices rise even faster. Real wages take price changes into account to show whether your pay buys more or less than it did before. You need to know which years are being compared, and which measure of prices was used.
Example
If pay rises by 4% while prices rise by 6%, real pay has fallen by roughly 2%.
Why it matters
Real wages help show whether workers' purchasing power is improving.
Also known as
inflation-adjusted wages
Related terms
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Collective bargaining
Workers' representatives and an employer negotiating pay or working conditions for a group.
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Inflation
A general rise in prices over time.
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Labour share of income
The share of income generated in an economy that goes to people for their work.
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Median earnings
The middle amount of pay when people's earnings are put in order.
Read more -
Nominal wages
Pay measured in pounds, without adjusting for changes in prices.
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Purchasing power
How much you can buy with a given amount of money.
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Real terms
A way of comparing money in different years after allowing for changes in prices.
Read more -
Wage growth
How much pay has risen or fallen compared with an earlier time.
Read more
Keep in the loop
News
Highlights from about the UK economy, the UK government and the UK public sector.
Mortgage relief will have to wait a little longer
Wednesday 4 November 2026
Interest rates are staying at 3.75%, so households with mortgages and other borrowing may have to wait longer for costs to come down.
Energy bills are going up as winter approaches
Wednesday 4 November 2026
A higher energy price cap means many households will be paying more to heat and power their homes during the colder months.
Guides and insights
Analysis
Clear, accessible analysis of the economic issues shaping everyday life
Living standards
What does a day’s work buy?
Comparing the cost of everyday life across generations, from bread and beer to buying a home.
Food & prices
The journey behind your grocery bill
How farming, energy, transport and supermarket competition shape the price on the shelf.
Prices & inflation
Inflation is falling. What happens next?
What slower price rises mean for wages, purchasing power and economic recovery.
Shared prosperity
What would shared prosperity look like?
Beyond GDP: how we could measure economic success through security, opportunity and living standards.
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