The number of Britons out of work and claiming benefits rose for a fifth month running in June and by its largest amount since the slump of the early 1990s, in a sign the economic slowdown is starting to bite.
The Office for National Statistics said today claimant count unemployment rose by 15,500 last month after an upwardly revised 14,300 increase in May.
That was the biggest jump since a 71,000 rise in December 1992 and above analysts' forecasts for an increase of 10,000.
Sterling fell after the larger than expected rise in claims encouraged investors to bet that interest rates may fall to shore up the economy even as inflation rises.
At 2.6 per cent in June, however, the proportion of working age people claiming benefits is a far cry from the near 10 per cent rates seen in the early 1990s when the economy was in recession.
But economists said unemployment was set to rise further.
Annual average earnings growth in the three months to May eased to 3.8 per cent from 3.9 per cent in April, the ONS said. That was slightly higher than expected but still shows higher living costs have yet to feed through to wages.
The government and the Bank of England are concerned that the highest inflation in at least a decade - consumer price inflation hit 3.8 per cent in June, way above the Bank's 2 per cent target - will lead workers to demand much higher pay and embed sharp price rises.
Reuters