Interactive salary calculator reveals how big a pay rise YOU need to keep pace with cost of living crisis

• Average workers need to earn an extra £31 a week  to keep pace with inflation
• According to the ONS, the average worker earns approximately £682 a week 

British workers on average need to earn an extra £1,617 a year if their wages are to keep pace with the cost of living crisis, new research has found.  

According to the Office of National Statistics, full time employees earn on average £682 a week up from £518 a week in 2014.

Researchers at Nous said with household inflation running at approximately 4.2 per cent, workers need to increase their wages by at least 4.6 per cent to keep pace with the cost of living crisis.

They have developed a calculator which will work out the amount you need to earn to retain the same purchasing power each month.

According to Nous: ‘It’s not as simple as multiplying your salary by your personal inflation rate. Because income over £12,570 is taxed, and higher income are taxed at higher rates, you may need a pay rise that’s higher than inflation to keep up with rising prices.’

Workers need to earn on average an extra £1,600 a year if they want their spending power to keep up with inflation, according to new research

Prime Minister Rishi Sunak said inflation had more than halved, easing the cost of living crisis

The calculator estimates that an MP earning £86,584 a year would need to earn an additional £5,377.

Someone on the national minimum wage working 38 hours a week needs a boost of £1,187 a year to bring their annual salary from £20,590 to £21,777.

Greg Marsh, cost of living champion and founder of AI household money-saver Nous.co told MailOnline: ‘Households are facing yet more hardship as employers pencil in less generous pay rises this year than last, according to the latest research.

‘This is dire news after two years of soaring bills, which have left workers needing big salary increases just to maintain their standard of living.

‘At a time when pay isn’t going as far, you don’t want to be wasting money on bills. And almost all of us are paying far more than we need to.

‘At Nous we typically save households £500 a year on their bills – that’s like a 2 per cent pay rise on the average salary after tax.’

According to the ONS median weekly earnings in April 2023 was £682 – a 6.2 per cent increase on 12 months earlier.

Statisticians said his was the highest annual growth since they started recording data in 1997.

Lower paid workers saw their wages increase by more than nine per cent.

New polling research has found that the cost of living crisis is the number one issue for all sections of society.

Think Tank More in Common discovered that suburban woman over 60 who voted Conservative in 2019 could be vital when it comes to whoever is the next person handed the keys to 10 Downing Street.

More In Common’s analysis, based on polling of more than 3,000 British adults in the last week of January, also suggests that the next election will be based on policy rather than personality, with neither of the two main party leaders proving a draw for voters.

Five simple ways to make your money go further… if you’re not expecting a pay rise this year

Energy bills

Households need to be extremely wary of committing to fixed energy deals right now. The reason some deals appear attractive is they’re being promoted just before the price cap falls so suppliers are comparing savings to the higher amount we’re paying at the moment.

Fortunately, Nous can save most people around £150 on their energy without needing to fix.

Switch to supermarket own brands

A typical family with two adults and two children spends £129.20 a week, or £6,718 a year, on groceries.

According to Kantar, switching to supermarket own brands can cut your bills by 10%, bringing down shopping bills by £671 in 12 months.

Broadband

Check if you’re paying for broadband speeds you don’t need – superfast fibre is enough for most of us and usually available for £25 a month.

Nous data shows households who are out of contract spend an average of £59.75 a month, and could save hundreds in a year.

Mobile bills

Millions of households are out of contract on their mobiles and could immediately switch to a cheap SIM-only deal – you can get 3GB a month for around £5.

Text INFO to 85705 to find out if you are in contract.

Get paid to switch your bank account

You could earn up to £200 for switching your current account to a new bank using the Current Account Switch Service.

Your payments and balance will be transferred and your old bank will take care of closing your account.

The think tank’s UK director Luke Tryl said: ‘As this in-depth analysis suggests, the parties’ fortunes are likely to be shaped by a series of factors that sit underneath headline voting intention.

‘That includes the dominance of the cost of living, the rising salience of crime, what the unusually large number of undecided female voters who voted Tory in 2019, ultimately decide to do and to what extent third-party voters for the Greens, Liberal Democrats or Reform UK decide to vote tactically.’

The cost of living remains a key concern, listed as the number one issue by every voter group despite the fall in inflation over the past year, while concerns about crime and the NHS were particularly prevalent with swing voters.

Research by human resources data company XpertHr said the scale of pay settlements has fallen back in the three months to the end of January from 6 per cent to 5.1 per cent.

They examined 57 pay awards covering 180,000 employees.

The found that the average pay settlement in January was approximately 5 per cent.

Shelia Attwood, senior content manager at XpertHR said: ‘ Around half of employee groups are receiving settlements worth less than their previous award, where high awards were provided to account for the rising cost of living affecting UK employees at the end of 2022 and throughout 2023.

The Bank of England’s Deputy Governor Ben Broadbent said earlier high wage settlements were due to inflation rather than shortages in the labour market.

Official data showed average earnings, excluding bonuses, rose by an annual 6.2% in the fourth quarter of last year – less than in the middle of 2023 but roughly double the pay growth which the BoE thinks is compatible with keeping consumer price inflation at its 2 per cent target.

CPI peaked at 11.1 per cent in October 2022 and was 4% in December and January. The BoE expects it to fall to its 2 per cent target in the second quarter of 2024, but fears it will rise back towards 3 per cent later in the year as the effect of lower energy prices fades.

Prime Minister Rishi Suank praised the economic outlook during an address to the Conservative Party’s Welsh conference in Llandudno on Friday.

He said: ‘Inflation has been more than halved, mortgage rates starting to come down, wages having been rising for six, seven months in a row now.

‘We just saw today… energy bills significantly down. Consumer confidence, business confidence, again, a survey out yesterday, highest it’s been in years.’

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