© Press Association 2008
THE gap between pay rises and the rate of inflation has fallen to 1.3 per cent, reducing fears of a wage-price "spiral", according to a new report.
Pay analysts Industrial Relations Services said recent average settlements were worth 3.5 per cent, against an RPI inflation figure of 4.8 per cent in August.
The gap between pay and inflation was 1.5 per cent last month, but has been reduced in light of recent settlements and falling RPI inflation, said the report.
A study of 76 settlements showed that half of deals in August were worth between three per cent and four per cent, while rises in the public sector were one per cent below increases in private firms.
Sheila Attwood of IRS said: "Private sector pay awards are heavily influenced by movements in the retail prices index inflation measure.
"However, negotiators will often look to set their pay awards based on a longer-term trend in inflation.
"As such, while RPI fell in August, pay setters will be looking at how this downward path progresses before deciding the extent to which pay settlement levels can also fall."
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here