Chancellor's Budget: Minimum wage to rise, but will it be swallowed up by higher living costs?

National Living Wage is set to increase to £9.50 an hour from April 2022 which is a rise of 6.6%. Reacting to the news Sarah Pennells, Consumer Finance Specialist at Royal London, said:

“As expected the Chancellor announced a rise in the minimum wage from £8.91 to £9.50 from April 2022, giving full-time workers over the age of 23 a boost of £1,074 a year before tax. On the face of it the 6.6% increase is generous. However, any comfort for low earners is likely to be short lived. By the time the rise comes into force next year, it could effectively be wiped out by the rising cost of living.

“Inflation, already ahead of the Bank of England’s 2% target, threatens to bite even harder, with the OBR predicting that the CPI rate of inflation will average 4% next year.

“On top of that there’s concern about rising energy costs with the jump in the energy price cap at the start of this month and another possible rise in April, just as the rise in the minimum wage takes effect.”