If you are a young person in the UK looking for a job right now, you are unlikely to be successful. If you consume a lot of olive oil, you will have noticed a sharp decline in prices. And if you are Rachel Reeves, you have a record budget surplus.

These were just some of the nuggets of information in the latest monthly dump of economic data from the Office for National Statistics.

Of all the ONS data releases over the past week, the labour market report was the most alarming.

Unemployment rose to a five-year high of 5.2 per cent and youth joblessness increased to its highest level in over a decade, even including the pandemic. Private sector wages rose at the slowest pace in nearly six years and job vacancies extended a run of decline that stretches back to the spring of 2022.

Many economists think the labour market is going through a natural cooling down period after running hot in the two years after the pandemic. However, policy choices by the government have made matters much worse.

Since the chancellor’s first budget in October 2024, when she announced a £25 billion rise in employer national insurance contributions (NICs), payroll employment is down by more than 200,000. That tax rise took effect in April last year, with disastrous consequences for young workers.

Since the first three months of 2025, which was the last quarter of ONS labour market statistics before the implementation of the NICs rise, there has been a 270,000 increase in the number of people unemployed in the UK. Those aged 16-24 make up nearly half of that.

On top of the NICs rise, the government plans to compress minimum wage differentials between younger workers, further increasing the cost of employing them.

As a result, compared with 2024, the minimum wage for those aged 18-20 will have increased by just over 25 per cent to £10.85 an hour by April, from £8.60 an hour. For 16-17 year olds, the minimum wage will have increased to £8 an hour from £6.40 two years ago, also a 25 per cent rise.

Both have risen by more than double the national living wage rate for all workers over the age of 21 over the same period.

There could be some policy movement to counteract rising youth joblessness. The government is said to be considering at least easing some of these minimum wage increases for young workers to slow the pace at which they entirely eradicate the pay differentials by age.

Sir Keir Starmer reiterated his support for the original policy, as contained in the Labour manifesto, this week. The Youth Guarantee scheme, which will roll out from this spring, is designed to specifically tackle youth joblessness by partially subsidising the cost of employing eligible young people.

“Being unemployed while young is strongly associated with long‑term wage penalties, repeat unemployment spells and higher fiscal costs”, Sanjay Raja, chief UK economist at Deutsche Bank, said.

James Smith, developed market economist at ING, said the increase in youth unemployment had also been driven by the retail, leisure and hospitality sectors trimming headcounts after they “overstaffed” in response to the post-Covid surge in demand.

Forecasts from the Bank of England predict that the general level of unemployment in the UK will peak at 5.3 per cent this year, before gradually falling back.

Members of the Bank’s monetary policy committee would have been more struck by the dismal labour market statistics than the sharp fall in inflation that the ONS reported this week.

Inflation dropped to 3 per cent year-on-year in January from 3.4 per cent in the previous month, the joint biggest decline since September 2024. Food inflation slipped to its lowest point in nearly a year and services inflation edged down again, as did core inflation.

Despite that decline, cost of living pressures persist. The ONS data showed that the price of milk rose by nearly 16 per cent over the last year, cinema and concert tickets jumped by 10 per cent and magazine subscriptions rose by more than 9 per cent. Spare a thought for offal eaters, the price of which jumped by 14.5 per cent.

In the opposite direction, olive oil prices dropped by 12 per cent, having risen sharply over the past few years. Contents insurance premiums slid by almost 16 per cent and flour dipped by 6.6 per cent.

Come the spring, inflation is expected to be back to the 2 per cent target, dragged down by measures announced in the November budget, including the removal of green taxes from household energy bills and the first freeze in rail fares in 30 years.

In response to this week’s steep inflation decline, and worrying labour market data, markets priced in an 80 per cent chance of the Bank lowering interest rates at its meeting on March 19 and some analysts predicted there could be three cuts in total this year, taking borrowing costs down to a four-year low of 3 per cent, from 3.75 per cent at present.

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Philip Shaw, chief UK economist at Investec, said this week’s data deluge “is reassuring on short and medium-term inflation trends and therefore reinforces prospects of rates coming down again relatively soon”.

Falling inflation and rising unemployment comes amid sluggish growth, with GDP up by just 0.1 per cent in the final quarter of last year, although calendar year growth in 2025 climbed to 1.3 per cent from 1.1 per cent the previous year.

Analysts at UBS said the economy could face headwinds this year “from the more difficult global trade environment and the challenging domestic political environment and fiscal outlook”, with Starmer’s premiership still on very shaky ground.

GDP per person, a measure of living standards, rose by 1 per cent last year after it flatlined in 2024 and hidden within the ONS’s GDP figures was a revival of UK investment after years of neglect.

Compared with 2023, public investment has climbed by more than 8 per cent and private investment is up by 6 per cent, suggesting that the increase in government capital spending since Labour came to power has stimulated private sector spending. Raja said that “investment is firing on all cylinders”.

However, Paul Dales, chief UK economist at Capital Economics, said that any growth this year would be entirely driven by government spending. “Our forecast is that GDP will rise by 1 per cent this year. All of that will come from the public sector. Private sector activity won’t grow at all.”

Rounding off the week on Friday, there was plenty of good news for the chancellor before the spring statement on March 3. Government tax revenues exceeded spending by the greatest degree since records began in the 1990s, handing Reeves a record monthly budget surplus of £30.4 billion in January, well in excess of analysts’ forecasts.

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Higher income tax receipts as self-employed workers filed their tax returns, elevated capital gains tax revenues and an increase in employer NICs delivered the surplus, more than double that of the same month last year. Debt interest spending also fell sharply to £1.5 billion in January, from £9.1 billion in the previous month.

As for shoppers, they are more preoccupied with the finer things in life. Demand for jewellery hit “unprecedented” heights in January, the ONS reported, as consumers rode a surge in gold prices, leading retail sales 1.8 per cent higher.