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Financial wellbeingEconomics, government & businessLatest NewsPay & benefitsPay settlements

Inflation in March 2022 rises to 7%

by Ashleigh Webber 13 Apr 2022
by Ashleigh Webber 13 Apr 2022 Soaring fuel prices are partly behind rising inflation
Shutterstock
Soaring fuel prices are partly behind rising inflation
Shutterstock

Inflation in the year to March 2022 reached yet another 30-year high, with the consumer prices index (CPI) hitting 7%, prompting fresh fears that employees’ wages are not stretching far enough to cover the cost of living.

This is the highest 12-month inflation rate recorded by the Office for National Statistics since February 1992, when CPI was estimated to stand at 6.3%.

The retail prices index (RPI) measure, which is no longer an official statistic but is still referenced by trade unions in pay negotiations, stood at 9% – up from 8.2% recorded in the 12 months to February 2022.

The annual CPIH rate, which includes housing costs, was 6.2%, up from 5.5% in February.

According to XpertHR, the median basic pay increase in the three months to the end of February was 3%, unchanged from the previous rolling quarter.

Last month the CIPD found that one in eight employees felt their pay was not enough to cover living costs. Twenty-eight per cent said money problems had an effect on their work performance.

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TUC general secretary Frances O’Grady called on the chancellor to go to parliament with an emergency budget to help workers with surging energy bills and a plan to increase wages.

O’Grady said: “The chancellor has done almost nothing to help families as prices surge. And by holding down pay in the public sector and cutting universal credit, he has made the crisis worse.”

Gary Ashworth, founder of recruitment firm InterQuest Group, warned employers that staff would soon demand pay rises.

“People are being made to pay more for food, petrol and mortgages and will demand pay rises to cover the increase. Firms will then pass on price rises to customers and so the merry-go-round continues,” he said.

“Rapidly rising inflation such as we are seeing is the equivalent of a hefty pay cut and can lead to recession and ruin economies. It can be the death knell for businesses and governments and even destabilise entire countries.

People are being made to pay more for food, petrol and mortgages and will demand pay rises to cover the increase.” – Gary Ashworth, InterQuest Group

“Governments have to raise interest rates, curb money supply and restrict public sector wages, hoping that the rest of industry will follow suit.”

Sheila Attwood, pay and benefits editor at XpertHR, said last month that some employers “plan on offering one-off payments on top of the annual pay review and others are considering a supplementary non-consolidated payment to be paid quarterly for the rest of 2022 directly in response to the cost-of-living increases.”

Applying wage rises in line with inflation might not be possible for all employers, said Hannah Copeland, HR business partner at employment law and HR support firm WorkNest. She advised employers to consider introducing employee assistance programmes that offer financial support, shopping discount schemes or interest-free loans for season tickets.

Employers must also be transparent about the pay review process, she said. “Even if the review doesn’t lead to a pay rise, then it is vital that this is communicated and some thought has gone in to looking at salaries and considering whether a pay rise could be applied. Yearly pay reviews are recommended unless your business operates performance related pay, in which case, individual objectives can be linked directly to business performance. In this situation, employees become more able to control their income based on what they deliver.”

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Ashleigh Webber
Ashleigh Webber

Ashleigh is editor at OHW+ and HR and wellbeing editor at Personnel Today. Ashleigh's areas of interest include employee health and wellbeing, equality and inclusion and skills development. She has hosted many webinars for Personnel Today, on topics including employee retention, financial wellbeing and menopause support. Prior to joining Personnel Today in 2018, she covered the road transport sector for Commercial Motor and Motor Transport magazines, touching on some of the employment and wellbeing issues experienced by those in road haulage.

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