Settlements regain slight lead over RPI

The median level of pay increases on LRD’s Payline database for the three months to September was 4.0%, the same as August’s revised figure, meaning that settlements are – just – ahead of inflation again.

The figure is higher than the 3.2% and 3.3% medians reported for the same period by the two other pay analysts, IDS and IRS.

The gap between pay rises in the public and private sectors has widened, with median figures of 3.0% and 4.5% respectively.

Inflation

The Retail Prices Index (RPI) continues to yo-yo around 4%, dropping to 3.9% in the year to September from 4.1% a month earlier. The RPI excluding mortgage interest payments (RPIX) rose slightly to 2.8% from August’s 2.7%, while the Consumer Prices Index remained at 1.8%.

Forecasts for inflation in the fourth quarter of 2007 have been revised down to an average of 3.8%.

Earnings

Average earnings growth (including bonuses) for the whole economy in the year to August was 4.2% – sharply up from 3.8% in the year to July and just 3.2% in June. The figures are more stable if bonuses are excluded, with increases of 3.5% to June, 3.7% to July and 3.8% to August.

Increases in manufacturing earnings have slowed sharply to 2.7% for the year to August, down from 4.3% in July. In services, the rate of earnings growth moved up to 4.6% in August from July’s 3.7%.