Pay deals keep to 3.0%-3.2% band

The latest figures from the LRD PayLine database show settlements overall at 3.2% for the three months to November up from the revised 3.0% for the three months to October.

The median for the payround is slightly lower at 3.1% and a gap has opened up between the manufacturing median at 3.5% and the service sector median of 3.1% for the three months.

Prices

A significant change on the prices front is the switch by the government from using the Retail Prices Index (RPI) as their main measure of inflation to using the renamed Consumer Prices Index (CPI).

The CPI (formerly the Harmonised Index of Consumer Prices (HICP)) is the standardised European measure of inflation. The Chancellor announced the change of name and a new inflation target of 2% base on the CPI.

The Bank of England's Monetary Policy Committee will now have to keep inflation to no more than 2% as measured by the CPI which currently stands at 1.3%.

Whilst it has no direct connection with bargaining the Chancellor did suggest that public sector pay should be linked to the CPI.

The main difference between the RPI and CPI is that the latter excludes housing costs, that is mortgage interest payments, house depreciation, buildings insurance and council tax (see page 5).