Settlements stay steady as inflation falls

Pay settlements on our Payline database were running at a median increase of 3.4% in the three months to July, the same level as the median across the entire payround just ended (August 2004 to July 2005).

The private sector stayed ahead of the public sector, with a 3.5% median for both the three months and the whole payround, compared with 3.2% (again, over both periods) for the public sector.

Over the past three months, manual settlements were ahead of non-manual (3.4% compared with 3.2%, and manufacturing at 3.5% was ahead of services on 3.3% - again, these figures are identical or near-identical to those for the entire payround.

Earnings

The latest Average Earnings Index figures show annual growth at 4.1% to June, unchanged on the revised figure for May. However, increases in manufacturing earnings averaged only 2.8% (still an improvement on the 1.9% figure the previous month).

The variations between public and private sector narrowed sharply in June, with the public sector just ahead at 4.3% compared with the private sector average of 4.1%.

Inflation

The Retail Prices Index (RPI) remained at 2.9% in the year to July, but the RPI excluding mortgage interest payments (RPIX) rose to 2.4% - up from 2.2% in the previous month. The government's preferred measure, the Consumer Prices Index (CPI), also rose, from 2.0% to 2.3%.