Prices inch up as settlements slow down

The latest figures from our Payline database show a median increase for the three months to June of 3.3% - slightly down on the median to May of 3.5%. The median increase over the payround so far (August 2004 to June 2005) is 3.4%. Pay settlements therefore remain ahead of the Retail Prices Index (RPI) measure of inflation, which stood at 2.9% in the year to June.

Over the past three months, the median settlement in the private sector was 3.6% (ahead of the public sector's 3.1%), and manual settlements (3.5%) outstripped those for non-manual workers (3.2%). Manufacturing had a median of 3.5%, while in services the figure was 3.2%.

Earnings

Over the year to May 2005, earnings across the whole economy rose by 4.2% on average. However, earnings growth in the private sector averaged just 3.4% - less than half the public sector's 7.6% increase. The average increase in manufacturing earnings was just 1.9% - the lowest level for more than 20 years - but services saw increases averaging 4.7%.

Whole-economy average earnings growth across March, April and May was 4.1%

Inflation

The 2.9% level of the all-items RPI in the year to June was unchanged on the previous month. At 2.2%, the RPI excluding mortgage interest payments (RPIX) was slightly up - as was the government's preferred measure, the Consumer Prices Index (CPI), at 2.0%.