Inflation overtakes pay settlements

The latest figures from LRD's Payline database, covering the three months to June, show no change from last month's figures. Settlements are running at 3.0% across all sectors and industries, with the annual figure weighted by workers covered providing the only variation (down from 3.9% to 3.0% for the year to June).

Inflation

Once again the rate of inflation went up this month across all measures. The retail prices index (RPI) for the year to June was 3.3%, its highest rate since December 2004, while the RPI excluding mortgage interest payments (RPIX) is now at an eight-year high of 3.1%. And the consumer prices index (CPI) was up from 2.2% in May to 2.5%, matching its highest-ever level since the series began in January 1997.

Earnings

Average earnings including bonuses increased by 4.3% in the year to May, according to the latest provisional figures - well above the revised figure of 3.6% for the year to April.

Private-sector earnings continued to rise faster than those in the public sector, averaging 4.6% and 3.7% respectively. But the gap between earnings in manufacturing and services has narrowed, thanks largely to an increase of one percentage point in the figure for services.

When bonuses are excluded, the average earnings increase for the whole economy was 3.9%, with the private-sector average (4.3%) well above the public sector's 2.4%.