Britain’s unemployment rate has fallen further, data showed on Tuesday, but sliding wages are continuing to worsen the nation’s cost-of-living crisis.

The unemployment rate dropped to 3.8 per cent in the three months to the end of February from 3.9 per cent in the three months to January, the Office for National Statistics (ONS) said in a statement.

Wages, however, sank in real terms. Britain faces runaway inflation and rocketing energy costs as a result of the war in Ukraine and demand recovering from the pandemic.

Average pay, excluding bonuses and taking inflation into account, slid one per cent in the quarter to the end of February. That matched the drop in the quarter to the end of January.

“Basic pay is now falling noticeably in real terms,” said ONS economic statistics director Darren Morgan. He noted, however, that “strong” bonuses were mitigating the effects of rising prices on people’s total earnings.

Yet UK annual inflation accelerated to a 30-year high at 6.2 per cent in February – and the Bank of England (BoE) predicts it could surge further. “The harsh reality is inflation has erased gains in wages and then some... which for many means that while their pay packet has gone up, they can buy less stuff with it,” said Interactive Investor analyst Myron Jobson.

“With the BoE predicting that inflation could hit double digits this year, workers could be trapped in a cycle of bumper wages only to see those gains nullified by rising prices.”

With the BoE predicting that inflation could hit double digits this year, workers could be trapped in a cycle of bumper wages only to see those gains nullified by rising prices- Interactive Investor analyst Myron Jobson

The cost of living is meanwhile set to soar even higher due to an April tax hike on UK workers and businesses and a fresh surge in energy bills.