Pay rates slide as inflation falls

Consumers suffering debt problems may have felt some relief as inflation has declined in recent months, but pay rates are also dropping.

While the Consumer Prices Index rate of inflation has dipped to 3.6 per cent, the latest Office for National Statistics figures for pay settlements have shown the total rate of pay in the three months (including bonuses) rose by only 1.4 per cent, while pay excluding bonuses was only up 1.7 per cent.

And these settlements were down by 0.5 per cent and 0.3 per cent respectively on the three months to December.

This would indicate Britons are continuing to get worse off in real terms as wages continue to trail prices, which may make it harder for those in debt to find the cash to pay it off.

News of the weakening pay situation came as the official unemployment rate rose by 28,000 to 2.67 million.

Commenting on the latest figures, chief economist delete for the British Chambers of Commerce David Kern said "private-sector job creation must be put at the top of the government's agenda" in the upcoming Budget on March 21st.

By Joe White