Wage growth across the economy has slowed to 2%, underlining the financial challenges facing households in the run-up to Christmas.

The Office for National Statistics (ONS) said that average wages grew at an annual rate of 2% in the three months to October.

That marked a significant weakening from the 2.4% growth seen in the previous three-monthly period. With inflation running at just 0.1%, living standards are still rising, on average. But anaemic pay growth undermines hopes that household balance sheets will continue to improve after the long post-recession squeeze that saw pay flat or falling for several years.

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Once bonuses were included, pay growth in the three months to October was still just 2.4%, down from 3% over July to September, the ONS said.

Pay has remained weak, despite the unemployment rate falling to 5.2%, its lowest rate since 2006, and the share of the population in employment hitting a record high.

“The employment rate (the proportion of people aged from 16 to 64 who were in work) was 73.9%, the highest since comparable records began in 1971,” the ONS said.

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