RPI figure plummets

The latest figures from LRD’s Payline database show that negotiated pay increases for the three months to December 2008 had a median of 4.0%, up slightly from the revised figure of 3.8% for the three months to November. The variations between sectors narrowed slightly with private sector agreements having a median increase of 4.0%, while the public sector median was 3.2%. The gap between manufacturing and services had widened, with the services median rising to 4.5% while manufacturing was 4.0%. There was no difference between one-year deals and long-term agreements.

Inflation as measured by the Retail Prices Index (RPI) continued its dramatic fall. In the year to December the RPI had only increased by 0.9%. In September the annual increase had been 5.0%. The drop is expected to continue, with forecasts for the fourth quarter of 2009 showing an average change in RPI of minus 1.3%. Clearly negotiators will need to treat inflation-linked deals with caution. Other measures of inflation paint a rather different picture. RPIX (which excludes mortgage interest payments) fell to 2.8% in December from 3.9% in November. The Consumer Prices Index (CPI), also fell to 3.1% for the year to December from 4.1% in November.

Government figures on average earnings (bonuses excluded) indicate that in the year to November 2008 pay had increased across the whole economy by 3.6%. However there were sectoral variations with the private sector increasing by 3.5% and the public sector by 4.2% on average.