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Retail prices

CPI jumps from 2.0% to 3.2% and RPI up from 3.8% to 4.8%

In August, the Retail Prices Index (RPI) stood at 307.4 (January 1987=100) and the annual rate of inflation increased from 3.8% in July to 4.8%.

Whilst RPI is no longer an official statistic, union negotiators consider it to be the best available measure of inflation.

The annual rate of inflation under the Consumer Prices Index (CPI) in August rose from to 3.2% from 2.0% in July.

Under the Consumer Prices Index Housing (CPIH), the annual rate of inflation in August was 3.0% up from 2.1% in July.

This is the largest ever increase in both CPI and CPIH.

The largest contributors to the increase are restaurants and hotels, recreation and culture, and food and non-alcoholic beverages increased.

A large part of the increase in the restaurants and hotels category is a "base effect" as The Eat Out To Help Out scheme led to a large drop in restaurant and cafe prices in August 2020.

Figures for September 2021 are due to be published on 20 October 2021.

Latest pay deals

2.0% increase in the three months to August

The median standard increase for September 2020-August 2021 was 2.0% - the median increase on the lowest pay rate also 2.0%. In the public sector the median standard increase was only 1.0%. . Three-quarters of these pay settlements were first stage/unstaged.

The median standard increase for the three months from June 2021-August 2021 was also 2.0% - the median increase on the lowest pay rate was 2.3%).

Figures for September 2021 are due to be published on 20 October 2021.
Pay deals are calculated from Payline database of over 2,000 pay and conditions settlements. graph of pay settlements and inflation

Average earnings

Growth still artificially high but tailing off

Average weekly earnings for regular pay (excluding bonuses) in July 2021 dipped to 5.9% from over 7% the previous 3 months (6.8% for the 3 months to July).

The growth figures are still not entirely accurate as they are driven by the fall in the proportion of low paid jobs due to the pandemic and because they are based on a comparison to a period last year when wages were still subject to the economic shock of the pandemic (this is called the base effect).

Underlying growth is estimated to be likely under 4.5%.

There is growth across the board in the somewhat distorted figures but it is largely being driven by the private sector which is posting a 6.6% (down from 8.2%) single month comparison, and 7.8% for the three months to July.

In contrast, Public Sector wage growth is down considerably at 2.9%. Financial services is still very high at 9.7% whilst other sectors such as Manufacturing is down to 4.0% in the month (from over 6 two months ago) and construction has plunged back down to 7.3%, from a high of over 13 a couple of months ago.

The slight dip in the high growth figures may show the recovering economy in 2020 rather than indicate anything meaningful about the last months.

PAYE data provides early estimates for median monthly pay in August 2021 and indicate that it increased by 5.3% compared with August 2020 and by 6.5% when compared with February 2020.
Median pay across the UK in August 2021 ranged from £1,647 in Torbay to £3,064 in Wandsworth.

Figures for August/ September 2021 are due to be published on 12 October.


Payrolled employment reaches pre-pandemic level

Early estimates for August 2021 indicate that the number of payrolled employees rose by 3.0% compared with August 2020, which is a rise of 836,000 employees; payrolled employment has now reached its pre-pandemic level again.

An estimated 1.61 million people were unemployed, down 10,500 from the previous quarter.

The UK unemployment rate in July 2021 was estimated at 4.6%, 0.6 percentage points higher than before the pandemic, but 0.3 percentage points lower than the previous quarter.

The ONS' claimant count total includes people out of work and claiming Jobseeker's Allowance or Universal Credit.

The Claimant Count, as at August 2021 decreased very slightly at around 2,103,321 (seasonally-adjusted), down around 58,000 on the previous month.

Figures for August (unemployment) and September (claimant count) are due to be published on 12 October 2021.

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