The headline rate of inflation (subscription required) - as measured by the retail prices index (RPI) - stood at 4.3% in May 2008, according to official figures released today. Meanwhile, the IRS headline measure of pay awards (subscription required) across the whole economy is 3.2% - 1.1 percentage points below the rate of inflation. Prices are therefore rising 1.1 percentage points above the rate of increase in wages, resulting in major constraints on household budgets.

Just 6.1% of pay awards are worth the same as or more than RPI inflation.

At the same time, consumer prices inflation (CPI) (subscription required) - the government's preferred measure - surged to 3.3% in May, 0.1 percentage point above the headline pay award.

Below-inflation pay awards are therefore now a reality for most workers in both the public and private sectors. The median basic pay increase in the public sector in the year to April 2008 is 2.5%, 1.8 percentage points below RPI inflation. In the private sector, pay awards for the year to April 2008 are running at 3.5%, still 0.8 percentage points lower than the increase in prices.

IRS research reveals that this pattern has been continuing for some time. Pay settlements have now been below the rate of RPI inflation since May 2006, when both figures stood at 3%. The gap between inflation and pay settlements has hit a record 1.1 percentage points twice since then - in November 2007 and May 2008.

It will be intriguing to see whether these patterns change in our next monthly analysis, which will be published on the IRS Pay Intelligence (subscription required) homepage on Friday 27 June 2008, and will include full details of pay awards over the three months to 31 May 2008.

• If your organisation has recently settled its annual pay award, and you would like to contribute to our monthly analysis of pay trends, you can submit details of your organisation's latest settlement for inclusion in the IRS pay databank by completing the online form.