Prices inch ahead of pay rises again

The latest figures from the LRD Payline database of collective agreements shows a median pay increase of 4.0% in settlements reached or stages commenced over the three months to January – meaning that settlements are lagging very slightly behind inflation again. The only significant variation in median increases is between the private and public sectors, with the latter averaging just 3.0%.

Inflation

Whichever measure is used, inflation has increased. In the year to January the retail prices index (RPI) rose by 4.1%, up from December’s figure of 4.0%; the RPI excluding mortgage interest payments (RPIX) increased from 3.1% to 3.4%; and growth in the consumer prices index (CPI), previously 2.1%, was 2.2%. The CPI, the government’s preferred measure of inflation, has now been above its official target rate of 2.0% for four months.

Earnings

The average earnings index (including bonuses) for the whole economy rose by 3.6% in the year to December, well down on the 4.2% in the year to November. But the figure excluding bonuses was 3.8%, slightly higher than November’s 3.7%.

The public and private sector average increases were 3.3% and 3.8% respectively (3.7% and 3.8% excluding bonuses), while manufacturing earnings increased by 4.3% (4.0%) and those in the service sector by 3.6% (3.9%).