Pay rises 'closing inflation gap'

Last Modified: 21 Nov 2008
Source: PA News

Pay rises are closing the gap on the rate of inflation as prices fall, with wage increases running at 0.4% less than RPI, according to a new report.

Average pay deals were worth 3.8% in the three months to October, while the retail prices index was 4.2% last month.

The gap between the two reached a peak of 1.5% in September, according to the report by pay analysts Industrial Relations Services.

A study of 83 settlements showed that half were worth between 3% and 4.2%, while rises in private firms were almost 1% higher than those in the public sector.

Sheila Attwood, of IRS, said: "Falling inflation means that pay awards are worth only slightly less than the increase in prices.

"As retail prices index inflation continues to fall, this trend should continue, and we may see pay rises worth more than inflation as we head into the busy new year bargaining round."

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