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Unemployment rate lowest since 1975

More people are now in work. Credit: PA

The UK's unemployment rate is the lowest since 1975, new figures show.

The Office for National Statistics (ONS) said the number of people in work reached another all-time high, climbing by 181,000 to 32.13 million between May and July.

This is the highest it has been since records began 46 years ago.

But despite reaching record levels, wages are increasing below inflation, leaving many households struggling.

Growth in earnings remained at 2.1%, seeing overall pay slipping by 0.4% once inflation is taken into account.

It comes as official inflation data published on Tuesday showed the pay squeeze on cash-strapped households had intensified, with the cost of living rebounding to 2.9% in August, from 2.6% in both June and July.

Wage growth does not match inflation. Credit: PA

Matt Hughes, senior ONS statistician, said: "Another record high employment rate and record low inactivity rate suggest the labour market continues to be strong.

"In particular, the number of people aged 16 to 64 not in the labour force because they are looking after family or home is the lowest since records began, at less than 2.1 million.

"Despite earnings rising by 2.1% in cash terms over the last year, the real value of people's earnings is down 0.4%."

Meanwhile, the so-called claimant count dropped by 2,800 to 806,300 last month.