Employers cautious about pay as inflation rises to 2.6%

Inflation in the UK has reached its highest level for eight months. It rose to 2.6% over the past year.

According to the Office for National Statistics, fuel, clothing, and concert tickets prices have all increased. This is the highest rate of growth since March.

The Bank of England had forecasted the increase, but it has been urged to lower interest rates tomorrow to stimulate growth.

Paul Nowak, general secretary of the TUC, said that inflation has returned to target faster than expected in the past year. This means that families and businesses are still under pressure.

“The latest GDP figures and employment figures show that the economy remains fragile. The priority is to turn this around.

It’s important that the Bank of England continues to move forward and cuts interest rates tomorrow.

He said that the government’s plan for investing in our broken economic system is important, but it can’t be done alone.

Rachel Reeves, the Chancellor of the United Kingdom, said that she “fought to put more money into the pockets of workers” and acknowledged the struggle of families with the rising cost of living.

Retail prices index, a broader measure of inflation than the CPI, rose from 3.4% to 3.6%.

The ONS reported earlier this week that regular wages grew by 5.2% annually between August and Oct. This means wages are increasing faster than prices.

It said that the private sector’s pay increased by 5.4% while wages in the public sector grew by 4.3%.

Brightmine’s pay analysts confirmed these findings and concluded that the median rise in basic salary for 2024 was 4.5%. This is down from 6% a year earlier. Pay freezes made up 2.6% of all awards.

Sheila Attwood is Brightmine’s senior content manager of data and HR insight. She said that the increase in employer national security contributions and the national minimum wage contributed to a “squeezed budget” which could have a significant impact on the pay awards employees receive next year.

In response to the Autumn Budget, four out of ten respondents to a Brightmine survey indicated that they would cut their budget for salary review.

The CIPD also said that employers will need to receive more support in order to avoid job losses due to the rising cost of doing business.

James Cockett is a senior economist in the HR department. He said that employers face a tough time ahead, with the Budget causing an increase in employment costs, and the Employment Rights Bill introducing a number of new changes.

The uncertainty surrounding the Bill’s details will make 2025 a difficult year for many employers.

Cockett stated that employers’ options would be limited because of rising costs. She urged the government, in particular, to take into consideration smaller businesses, which “will be disproportionately impacted by these changes and will require more advice, guidance and support in implementing many proposals”.

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