LONDON--The U.K. unemployment rate fell to an over four-decade low in the three months through January, but wage growth after inflation slowed sharply, data showed Wednesday, signaling that Britons are facing a living standards squeeze despite the robust labor market.
Unemployment in the November-January period fell by 0.1 percentage point to 4.7%, the lowest rate since mid-1975, as employment rose by 92,000, hitting the highest level on record, the Office for National Statistics said.
Analysts polled by The Wall Street Journal expected no change in the unemployment rate.
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However, data also showed that rising inflation had begun to eat into real wage growth, a sign that consumers may rein in spending, potentially causing the economy to slow in the months ahead.
Adjusted for inflation, regular wages grew by only 0.8% in the three months through January, the slowest pace of growth since late 2014.
The data comes at a sensitive time for Prime Minister Theresa May, who is due to launch divorce proceedings with the European Union by the end of this month.
The information will also be parsed by the Bank of England's policymakers, who are due announce their latest interest rate decision Thursday, with analysts expecting no change to the benchmark rate, currently at 0.25%.
Write to Wiktor.Szary@wsj.com and Jason Douglas at Jason.Douglas@wsj.com
