Settlements stay steady as inflation falls

The latest figures from our Payline database of collective agreements show a median increase for the three months to May of 3.2% - the same level as in the three months to April. This means that settlements have crept ahead of inflation once again, as the increase in the retail prices index (RPI) fell back to 2.9% for the year to May.

As was the case last month, pay settlements in the private sector and manufacturing have stayed ahead of those in the public sector and services. Settlements for manual workers improved slightly, with a median of 3.5% (up from 3.4% in the three months to April), while for their non-manual counterparts the median increase remained at 3.2%.

Earnings

Growth in average earnings is also accelerating, reaching 4.3% in the year to April. However, this figure for the whole economy concealed some variations - contrary to the figures for pay settlements, earnings growth in services (4.6%) and the public sector (4/9%) outstripped growth in manufacturing (3.7%) and the private sector (4.2%). This suggests that pay progression plays an important role in wage increases in the public sector and in services.

Inflation

The slowdown in the all-items RPI to 2.9% growth in the year to May comes after fopur months of stability at 3.2%. The RPI excluding mortgage interest payments (RPIX) is also easing off, with an increase of 2.1% to May compared with 2.3% to April.