Bonuses boost growth in earnings

The latest figures from LRD's Payline database show a three-monthly median pay rise of 3.3% to March. This represents a slight fall from the 3.4% revised median rise to February, continuing the downward trend since January.

The Payline median is in line with figures from pay analysts Industrial Relations Services and Incomes Data Services. For further information on recent settlements, see page 15.

Prices

The latest Retail Prices Index (RPI) covers the year to March, and shows an increase of 3.2% - the same as for the year to February. The RPI excluding mortgage interest payments (RPIX) rose by 2.4%, up from 2.1% the previous month.

Forecasts for inflation in the final quarter of 2005 have been slightly reduced; the average forecast is now 2.5% for RPI and 2.2% for RPIX. The RPI average is drawn from a number of independent forecasts, ranging from 1.5% to 3.6%. The same forecasters have average earnings increasing by 4.5% in 2005.

Average earnings

The Average Earnings Index (AEI) has risen by 5.7% in the year to February. This figure has been boosted by bonuses - excluding bonuses, the equivalent figure is 4.2%.

Bonuses were particularly high in private sector services - the 7.2% rise in average earnings was only 4.4% if bonuses are excluded. In contrast, earnings increases in manufacturing averaged just 3.0%, even when bonuses are included.