MILLIONS of workers are facing a cut to pay as runaway inflation eats into household earnings.
New figures released today by the Office for National Statistics (ONS) show that regular pay in real terms fell by 2.9%.
1Regular pay has dropped, which means workers won’t see their money go as far
This is one of the largest falls seen since records began in 2001.
Prices are rising at a faster rate than pay, which means people’s incomes are squeezed.
Inflation dropped slightly to 9.9% in August from 10.1%, but it is still close to a 40-year high.
Wages grew by 5.4% in June to August, not including bonuses.

But when adjusted for inflation it fell 2.9% in the same period.
It’s a pay cut in real terms as wages are going up, and they don’t match the rate of inflation – which means people are effectively worse off.
Meanwhile the unemployment rate fell to 3.5% over the three months to August – the lowest since February 1974.
Economists had predicted that the unemployment rate would stay steady at 3.6%, the rate it hit during the previous quarter.

It came after a joint-record rise in the number of people considered “economically inactive” – not in work or searching for work – due to long-term sickness.
Economic activity increased by 0.6 percentage points to 21.7%, driven by people aged between 50 and 64.
The employment rate decreased by 0.3 percentage points to 75.5% for the quarter.
Meanwhile, the number of UK workers on payrolls rose by 69,000 between August and September to 29.7 million, the ONS said.
ONS head of labour market and household statistics David Freeman said: “The unemployment rate continues to fall and is now at its lowest for almost 50 years.
“However, the number of people neither working nor looking for work continues to rise, with those who say this is because they’re long-term sick reaching a record level.
“While the number of job vacancies remains high after its long period of rapid growth, it has now dropped back a little, with a number of employers telling us they’ve reduced recruitment due to a variety of economic pressures.
“However, because unemployment is also down, there continues to be more vacancies than unemployed people.”
 Chancellor Kwasi Kwarteng said: “Countries around the world are facing economic challenges but today’s statistics remind us that the fundamentals of the UK economy remain resilient, with unemployment at its lowest point for almost 50 years.
“Our ambitious growth plan will drive sustainable long-term growth, meaning higher wages and better living standards for everyone, and we are cutting taxes so people can keep more of what they earn.”
What it means for your money
The main concern when workers see a “real terms” fall in their salary, is that their pay is not keeping pace with the cost of living.
Even with an average pay increase of 5.4%, wage growth is still way behind inflation as prices of everything from groceries to energy bills are going up at a much faster rate.
But a tight labour market (with high employment and lots of job vacancies) could means it’s a good time to find a new job or ask for a pay rise.
It is likely you’ll still feel the pinch though as the cost of living crisis continues.
Energy prices, fuel and food are are among the essentials which have rocketed.
It means many are struggling to keep up, or have already fallen behind, on bills.
What help can I get?
If you’re struggling to get by, help is at hand.
Bill payers will see the first part of the £400 energy rebate hit their accounts this month.