Rocketing prices catch up with pay rises

The latest figures from LRD’s Payline database, covering the three months to May, show no change from the previous month’s revised figures. In every sector, the median pay rise in settlements reached over the past three months is 3.0%, as is the overall median for settlements in this pay round (from August 2005).

The only variation is in the median weighted by workers covered. This figure for the 12 months to May is 3.9%, slightly down on the April figure of 4.0%.

Inflation

Whichever measure is used, inflation is on the increase. The retail prices index (RPI) for the year to May rose sharply to 3.0%, while the RPI excluding mortgage interest payments is now at its highest since 2003, having risen from 2.4% in April to 2.9%.

The consumer prices index also increased, from 2.0% to 2.2%.

Earnings

Average earnings growth slowed in the year to April, with the whole-economy increase (including bonuses) dropping to 3.7% from the 4.4% revised figure for the year to March.

The gap between the private and public sectors has widened, with the private sector’s 3.7% increase well above the public’s 3.0%. And at 6.4%, the average in manufacturing is double the 3.2% in services.

Excluding bonuses, the average increases were 3.7% across the whole economy, 4.9% in manufacturing, 3.4% in services, 3.9% in the private sector and 2.7% in the public sector.