Retail prices index (RPI) inflation has notched up a fourth month in negative territory, plunging to an unprecedented low of -1.6% in June 2009 (PDF format, 196.3K) (external website), according to latest official inflation data, published today.
As we recently noted, one of the most singular characteristics of the current recession is for the previously unthinkable quickly to become commonplace. Both the headline IRS pay award and UK interest rates are already plumbing the depths of all-time lows, and now RPI has followed suit.
This has significant implications for pay awards. RPI is the most influential inflation measure for private sector pay setters. And movements in pay awards in turn exert a distinct influence on movements in RPI.
The ongoing collapse in RPI gives rise to the possibility of a vicious circle affecting pay and prices: a downward wage-price spiral could potentially develop over coming months.
- If your organisation has recently carried out an annual pay review, and if it has now been settled, please get in touch so that we can add your organisation's pay award to the IRS database.
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