UK state pension on track to rise 4% under triple lock; grocery inflation falls – business live

Just in: The European Commission has won two big legal fights against US Big Tech firms this morning.

Europe’s top court has upheld a €2.42bn antitrust fine imposed on Alphabet’s Google in 2017 for abusing its dominance of the search engine market in building its online shopping service, and gaining an unfair advantage over smaller European rivals.

Apple’s appeal against an order to pay €13bn in back taxes has also been dismissed.

The EU’s Court of Justice in Luxembourg has backed a landmark 2016 decision that Ireland broke state-aid law by giving the tech giant an unfair advantage.

This judgement is likely to have far-reaching effects on “sweetheart” deals for large multinationals.

Youth unemployment across the UK has hit its highest level in over three years, in a sign that young people are struggling to enter the labour market.

Today’s jobs data shows that the unemployment rate among 18-24 year olds jumped to 13.3% in May-July, up from 12% in April-June, on a seasonally-adjusted basis.

That’s the highest reading since December-February 2021.

The increase suggests that as the academic year ended, some students were unable to find work.

TUC general secretary Paul Nowak says:

“Working people are still facing major problems left behind by the Conservatives.

“Vacancies have been falling for more than two years. Millions of workers are in insecure jobs and without proper employment rights. And young people’s futures are on the line as youth unemployment rises.

“Most employers support the new government’s plans to make work pay and strengthen workers’ rights. It’s time to move on from the low-pay, low-rights approach that has failed so many people so badly.”

Good news for shoppers – grocery inflation has fallen.

Data provider Kantar reports that annual grocery price inflation was 1.7% in the four weeks to 1 September, down from 1.8% last month.

That will ease some of the pressure on household budgets – but even so, Kantar also flags that nearly 60% of UK households are worried about the rising cost of their shopping

Fraser McKevitt, the researcher’s head of retail and consumer insight, says:

“This is their second biggest financial worry, only behind home energy bills.”

Kantar reports that prices are fastest for vitamin and mineral supplements, chilled fruit juices and chocolate confectionery.

But toilet tissue, dog food and bottled cola drinks are among the items whose price is falling.

Kantar also reports that online supermarket Ocado was again the fastest growing grocer with sales up 12.9% year-on-year in the last monthr.

Tesco’s sales rose by 5.3%, while Sainsbury’s grew 5.7%.

Asda struggled, though, with a 5.6% fall in sales last month – adding to the pressure on the company after a poor summer.

While the government may be handing pensioners an increase in the state pension with one hand, it is taking away the winter fuel allowance from around nine million pensioners with the other.

That controversial decision to means-test the winter fuel payment means only poorer old people – who get pension credit – will still receive it.

So much of the increase in the state pension will be eaten away by that move, and by rising prices in the shops.

Myron Jobson, senior personal finance analyst at interactive investor, explains:

“It is all but confirmed that the state pension will rise in line with average earnings, as the headline inflation figure for September is not expected to come in higher.

“While the £460 increase in the state pension may seem like a welcome boost on the surface, many pensioners won’t feel any richer thanks to the double whammy of inflation, which continues to erode the real value of any pension increment, and the loss of the £300 Winter Fuel Payment, which is now means-tested.

“Our calculations offer a stark reminder that while the state pension is a vital component of retirement income, it falls short of covering even the minimum income needed to enjoy a comfortable retirement. Worryingly, our research has exposed a looming national pension emergency, with people at the crunch stage of their retirement planning not saving enough into their pensions to secure a comfortable living standard in retirement.

The number of workers on payrolls fell in the last two months – a sign that the jobs market may have cooled a little in July.

The ONS estimates that the number of payrolled employees in the UK decreased by 6,000 between June and July 2024.

But on an annual basis, payrolls were 203,000 higher than in July 2023 .

And in August, the ONS’s early estimate is that payrolled employees decreased by 59,000 month-on-month.

The number of people classed as economically inactive has dropped, but remains near record levels.

There were 9.298m people neither in work nor looking for a job in May-July, a drop of 136,000 in the quarter.

That has pulled the inactivity rate down to 21.9%, from 22.2% last month.

The ONS says:

The quarterly decrease in economic inactivity was mainly caused by those who are inactive because they are students, long-term sick, or retired. These decreases were partially offset by increases in those who are economically inactive because they are discouraged workers (meaning that they are eligible for employment but unemployed and not seeking work) and those inactive for “other” reasons.

Yesterday, Work and Pensions Secretary Liz Kendall held a meeting with labour market experts to discuss how to tackle economic inactivity – which the government calls ‘greatest employment challenge for a generation’.

Yael Selfin, chief economist at KPMG UK, fears the problem will not be solved fast:

“The high level of inactivity is expected to persist in the near term, as the number of long-term sick and the backlog in NHS waiting lists are likely to remain elevated. That could put pressure on the economy if demand recovers unexpectedly strongly.

Today’s UK jobs report also shows that the unemployment rate has fallen to 4.1% for the May to July quarter.

That’s down from 4.2% in April-June.

During the quarter, unemployment fell by 74,000 people to 1.437 million.

And employment rose in the quarter – it’s up by 265,000 to 33.232 million, to 74.8% of the population.

Newsflash: UK wage growth has slowed… but pensioners on the new state pension should still be guaranteed an increase of around £460 next year.

The latest UK labour market statistics, just released, show that total pay (including bonuses) rose by 4% in the May-July quarter.

And under the UK’s triple-lock pension pledge, that indicates that the new state pension should also rise by 4% next year.

That would lift the new state pension – currently £221.20 per week – up to around £230 per week, an increase of almost £9 a week from next April.

On an annual basis, it would increase the new state pension from £11,502.40 per year to £11,962 per year, an increase of £460 a year.

The final decision on the state pension will be taken by the secretary of state for work and pensions, Liz Kendall, before October’s budget. But chancellor Rachel Reeves has already pledged the government’s backing of the triple lock until the end of this parliament.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We’re about to get a new healthcheck on the UK jobs market, and learn by how much the state pension should increase by next year.

The latest labour market statistics, due at 7am, are expected to show the unemployment rate dropped to 4.1% in May-July, down from 4.2% a month ago.

But wage growth is also expected to have slowed; total pay (including bonuses) is expected to have risen by 4.1% in the quarter, down from 4.5%.

And that will have implications for pensioners.

Under the UK’s triple-lock system, the state pension should rise each year by either inflation (the previous September), average earnings (for May-July), or 2.5%.

Inflation is not expected to rise sharply again this year (it was last clocked at 2.2%), so it’s today’s earnings figures that will be crucial.

The new State Pension is £221.20 a week, or £11,502 per year.

So, if wages did indeed rise by 4.1% in May-July, that would lift the state pension by just over £9 per week to around £230 per week. In annual terms, that’s over £470 more, to £11,973 a year.

Labour pledged to maintain the triple lock in their election manifesto. And last night, chancellor Rachel Reeves told a meeting of the Parliamentary Labour Party:

“Tomorrow, we get data for earnings growth, which will inform the increase in the pension next year. We are protecting the triple lock, not just for this year, but for the duration of this Parliament.”

Reeves also faces a crunch vote on the government’s controversial plan to scrap the winter fuel allowance.

The agenda

• 7am BST: UK labour market statistics

• 8am BST: Kantar grocery sales figures 8am

• 9.30am BST: Mortgage lending statistics from the FCA

• 1.55pm BST: US Redbook index of retail sales