Last month, for the first time in many years, wages rose at a faster rate than the increase in retail prices. It made me wonder just how people have coped with the adverse disparity in these figures over such a long period of time. It’s been that way since the credit crisis of 2008-09.

Interest rates have been a key contributor. They have remained at record low levels throughout that period and, despite two small increases this year, are still at a very low level today. With the major monthly outgoing in most households being the mortgage repayment, people have been able to ignore the disparity as it doesn’t apply to their main item of expenditure. But if interest rates are going to keep on rising, will we be able to cope with outgoings if wages don’t keep pace?

Unemployment numbers have been at record lows too and the conventional wisdom is that when they drop, pay levels and inflation generally will rise. But that doesn’t appear to have been the case in the last few years. In fact, perversely, last month’s increase in wage rate inflation was accompanied by an increase in unemployment too. Maybe the rules that used to operate for these measures have simply been overtaken by more modern economics. It can’t make planning an economic strategy very easy if you can’t rely on key trends of the past.

All our household spending plans are now based on both partners working

The most obvious impact on wage rates stagnating is a squeeze on standards of living. We’ve been used to seeing increases in standards year on year, decade on decade as the concept of dual income couples has become the norm rather than the exception, and all of our household spending plans are all now based on both partners working.

Technology has played its part too. As the development of communication devices reaches a rate at which they move from luxury items for those with money to burn, through the must-have item of the early part of the century, to today when they are almost an implant on the human body, it is no wonder that monthly spending has a new key item that we have to fund out of income that is stagnating. And, of course, it’s not just a device for you, there’s the kids to buy for too. It doesn’t matter what’s happening to parents’ pay, little Johnny or Jenny can’t be seen without one.

There is no solution of course. Costs will inevitably continue to rise. We need to invest in a culture in which wages and living standards can keep pace or maybe even get ahead.

Thanks to all who have read my ramblings this year. Have a great Christmas and I’ll be back in 2019.