Pay still lagging behind inflation

PAYE slipThe persistent squeeze on household incomes has been highlighted by pay figures showing average earnings growth still running far below the rate of inflation.

Average total pay, including bonuses, rose by 1.4% in the year to April to £467 a week, the Office for National Statistics (ONS) said, while inflation was running at 3%.
However, the figures show that the rate at which real incomes are falling has slowed to a near 30-month low, giving some hope for consumer spending in the months ahead.

Scott Corfe, senior economist at the Centre for Economics and Business Research, said earnings data "remains dire".

"The weakness of earnings growth means that household incomes are still struggling to keep pace with the rising cost of living," he added.

Households were squeezed by high prices and sluggish wage growth throughout 2011 and early 2012, but the Bank of England predicts the pressure should ease as the rate of inflation pulls back to the Government's 2% target throughout the year.

Elsewhere, the figures showed regular pay - excluding bonuses - rising by 1.8% to £441 per week.

However, over the five months from December 2011 to April 2012 bonus payments were lower than in the same period a year previously.

The majority of bonus payments, particularly in the financial sector, are usually made between December and April, the ONS added.

Average total pay in the private sector was up 1.3% at £465 per week, while regular pay was up 2.1% at £431 per week. Average total pay in the public sector was up 1.4% at £479 per week in April 2012, while regular pay was up 1.2% at £475 a week.
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