Employment is high, skills are in demand. So why is pay still not rising? | Larry Elliott

UK living standards seem to be declining, as they did in the coalition years - but in very different economic circumstances

Looking back, the spring of 2015 was the perfect time for David Cameron to fight a general election. Tumbling oil prices had left inflation at zero and after a couple of years of falling unemployment, annual wage growth was nudging 3%. Rising real earnings translated into a feel-good factor that delivered a political dividend for the Conservatives.

Two years on, the real surprise is not the bounce-back in inflation, which at 2.3% remains modest by Britain's recent standards, but the renewed slowdown in wage growth. Unemployment has continued to fall since the general election and the jobless rate has not been lower since the 1970s.