Inflation continued to rise in June 2022, reaching 9.4% at the consumer prices index (CPI) measure and putting further pressure on employees’ salaries.
On a monthly basis, CPI rose 0.8%, according to the Office for National Statistics.
The retail prices index (RPI), which is no longer an official statistic but is used by many trade unions for pay bargaining, was 11.8%, up only slightly from 11.7% in May.
The increase in CPI inflation was mainly driven by rising fuel and food prices.
The CPIH, which includes owner occupiers’ housing costs, was 8.2% in June, up from 7.9% in May.
Pay awards and inflation
Pay settlements continued to lag well behind both CPI and RPI, with XpertHR finding that the median basic pay increase in the three months to the end of June 2022 was 4% for the third consecutive rolling quarter.
Sheila Attwood, pay and benefits editor at XpertHR, said: “Pay awards appear to have plateaued after a third consecutive rolling quarter held at a 4% median. Inflation, on the other hand, has showed no sign of slowing down, with the consumer prices index expected to remain high through the second half of 2022.
“For the many people suffering financially, this year’s pay rises will not be enough. Employers should aim for pay rises that get as close to inflation as they can, to support their staff. They should also explore alternative ways that they can help – whether that be through benefit packages that supply discounts for the weekly shop, or financial guidance that advises staff on how to best manage their money, it all helps employees to weather the cost-of-living crisis.”
Earlier this week, the ONS revealed that real wages had fallen 2.8% behind inflation in March-May 2022.
According to Willis Towers Watson’s latest inflation and rewards actions survey, many organisations were increasing salary budgets, paying higher salaries on a targeted basis, paying employees more frequently, or placing more emphasis on non-financial elements of compensation.
Two-thirds of organisations that planned to make more frequent salary adjustments expected to do so for targeted groups, with a focus on employees who are retention risks (71%), colleagues with rare/hot (68%) or digital skills (54%) and the lowest paid or highest performing workers (54%).
Willis Towers Watson’s work and rewards expert Alasdair Wood said: “Critically, companies will need to evaluate their business priorities to identify where longer-term funding will come from because it’s likely that issues surrounding recruitment and inflation will extend well into 2023 and possibly beyond.”