Soaring inflation unmatched by settlements

The latest figures from the LRD Payline database of collective agreements show settlements in the three months to September had a median (mid-point) increase unchanged from the previous period at 2.5%. With inflation measured by the Retail Prices Index (RPI) surging yet higher to 5.6% in the year to September, up from 5.2% in the year to August, the gap between pay increases and inflation now stands at 3.1%.

The level of settlements varies by sector with the private sector having a three-monthly median of 2.5% but the public sector only 1.6%, reflecting the effects of the public sector pay freeze. Settlements in manufacturing had a median of 2.5% while in services the figure was 2.3%.

Inflation figures have risen regardless of which measure is used. RPIX (excluding mortgage interest payments) is even higher than the RPI all-items figure, rising to 5.7% for the year to September (from 5.3% in the year to August). The government’s preferred measure, the Consumer Prices Index (CPI), rose to 5.2% for the year to September from 4.5% in the year to August.

The latest government statistics on earnings, the Average Weekly Earnings (AWE) figures, show that in the year to August, if bonuses are included, the increase for the whole economy was 2.2%. This is down from the revised figure for the year to July of 3.0%. However, if bonuses are excluded the increase was only 1.6%, slightly down on the revised figure to July of 1.7%.