Thursday 23 October 2014 8:36 pm

Pay rises next year will finally beat inflation

Chris Papadopoullos was City A.M.'s economics reporter until February 2016. He is an economist at OMFIF.

Wages look set to outpace inflation throughout 2015, according to new research published today. Private sector employers are predicting pay awards of two per cent over the coming year. The research comes from XpertHR, a human resources company, which has surveyed 282 organisations with regard to pay and reward in the year to 31 August 2015. An annual pay rise of just two per cent would normally be bad news. Before the recession, pay awards, or annual pay increases, tended to be between 2.5 and 3.5 per cent. However, inflation is much lower than it was then and it is expected to stay low next year. The headline consumer price index rose by 1.2 per cent in the year to September, lower than most analysts expected. “Inflation is likely to run below two per cent throughout 2015. With utilities firms unlikely to raise prices this side of the election and the drag from sterling’s appreciation, infla­tion should remain subdued,” said Robert Wood, economist at Beren­berg bank and former Bank of England inflation forecaster. Wages lagging inflation has been hotly debated over recent months.