Today's release from the Office for National Statistics (ONS) shows that:

• RPI inflation ran at -0.8% in October 2009. This was up 0.6 percentage points on the figure recorded one month previously (-1.4% in September 2009).
• Consumer prices index (CPI) inflation - the Government's preferred measure - continues to undershoot the Government's 2% target rate, running at 1.5% in September 2009 (up from 1.1% in August 2009).

Looking ahead, it appears likely that RPI is about to rebound strongly from its current period in negative territory, the first time it has fallen below zero since February 1960.

In the latest biannual economic outlook article from IRS, pay specialist Adam Geldman assesses the prospects for RPI in 2010 (subscription required). According to Geldman:

RPI inflation will pick up sharply as we move into 2010, driven up by higher petrol prices and the rise in VAT from 15% to 17.5%. It is projected to rise [...] to 1.9% in the first quarter of next year. Thereafter, it is predicted to rise further, approaching 3% during the final quarter of 2010.

Geldman also remarks on the direct and long-established relationship between RPI and the headline IRS measure of whole economy pay awards. RPI is the most commonly-used inflation measure for pay setters. Geldman says:

It is little wonder that the IRS headline measure of whole-economy pay awards, which tends to follow RPI movements, albeit with a time lag, has declined dramatically since the start of this year. It fell to zero over the three months to the end of July, where it has remained since.

It remains to be seen whether the predicted resurgence in RPI inflation in 2010 will be followed by a rise in the headline pay award. But historical precedent would suggest there could be reason to be optimistic here...

• Has your organisation recently carried out an annual pay review? If so, 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.