Settlements remain static, but inflation may be rising

The level of settlements as monitored by the LRD PayLine database of collective agreements showed little change this month, with the three-monthly median to April being 3.1% - a very slight increase on the 3.0% to March.

There was also little variation between sectors; the public sector remained slightly ahead of the private sector with 3.2% compared to 3.1%, and services stayed ahead of manufacturing with 3.2% compared to 3.0%.

Figures from National Statistics for average earnings increases continue to show rather more variation. While the increase for the whole economy was 4.3% for the year to March, the increase in services overall was 4.7% - and in private sector services it was 5.2%.

Bonuses

However, if the series excluding bonuses is used, the figures are very different; the overall increase is 4.1%, and in both overall and private sector services it is 4.0%. This confirms the fact we reported last month, that bonuses - particularly in the City - have caused a "blip".

On the inflation front, the gap between the different measures has narrowed a little. While the Retail Prices Index (RPI) for the year to March dropped slightly to 2.5%, the Consumer Prices Index (CPI) rose to 1.2%. The CPI is the government's preferred measure of inflation; it excludes housing costs.