Survey results published by the Chartered Institute of Personnel and Development (CIPD) showed that UK employers expect private sector pay rises to rise by 4% over the next 12 months, the same as three months ago, while the corresponding expectations for the public sector remained at 3%. The CIPD survey of 2,009 employers took place between March 26 and April 18.
According to the latest data from the Office for National Statistics (ONS), in March consumer prices rose by 3.2% per year after an increase by 3.4% in February. The latest reading was the lowest since September 2021. Economists had expected inflation to slow to 3.1%. Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose by 4.2% per annum (the lowest rate since December 2021) after an increase by 4.5% in February. Consensus estimates suggested an increase by 4.1% per annum. On a monthly basis, core consumer prices rose by 0.6%, compared with the 0.6% increase in February and the market estimate of a 0.3% increase. The data also showed that on a monthly basis, the consumer price index increased by 0.6%, as in February. Economists expected a 0.5% increase.
The Bank of England expects inflation to fall to about 2% per annum in April after a reduction in regulated energy prices. Meanwhile, the Central Bank has revised its forecast for wage growth in 2024 to 5.25% from 4% in February.
"Although employers' expectations for salary increases remain above pre-pandemic levels, we predict that they will adjust their wage increase plans in the coming months as inflation declines and the labor market continues to slow down," James Cockett, labor market economist at the CIPD, said.
Meanwhile, experts have warned that if productivity does not improve, wage growth will stop, or wage increases will simply be accompanied by price increases, which will exacerbate inflation problems.
According to official data, in the three months to February, the growth of average weekly earnings remained stable, at 5.6% per annum, and the same indicator, excluding bonuses, decreased to 6.0%. It is expected that the March report, which will be published tomorrow, will indicate that the growth of these indicators has slowed to 5.3% and 5.9%, respectively.