Pay deals slip back below inflation again

THE latest figures from LRD’s Payline database show pay deals falling behind inflation again. The three- month median to April was unchanged at 4.0% while the retail prices index (RPI) surged ahead to 4.2%, up from 3.8% the previous month. The gap between private and public sector settlements grew even wider with the private sector remaining at 4.0% but the public sector median falling to 2.8%. The annual median for all settlements has now increased to 4.0% as well.

Inflation

The RPIX, the inflation rate excluding mortgage interest payments, also rose to 4.0% from 3.5% the previous month. The government’s preferred measure, the consumer prices index (CPI), was up sharply to 3.0% from 2.5% the previous month. The CPI had been below 3.0% since April 2007 and has only reached that level twice.

Earnings

The average earnings index for the whole economy rose by 4.7% in the year to March, up sharply from the revised figure to February of 3.7%. If bonuses are excluded the increase was only 3.7%, down from the February figure of 4.0%.

The increase in the private sector rose to 4.7% from 3.5% the previous month, while in the public sector the reverse occurred with a drop from 4.2% to 3.7%. However, if bonuses are excluded the position is very different with the private sector down at 3.7% and the public sector also down but still at 3.9%.