Inflation exceeding wage growth could hit retail
The Voca take home pay index shows that growth in take home pay eased to 3.6 per cent in April from 3.7 per cent in March.
Payment services firm Voca said that this downward trend shows that the expected strong pay increases in the January wage round have so far failed to materialise.The Voca services sub-index, which reflects take home pay growth in the service sector eased from 4.3 per cent in March to 3.6 per cent in April.
In contrast, the manufacturing sector sub-index rose from 2.7 per cent in March to 3.4 per cent in April. Richard Cooper, head of marketing and communications at Voca, said “The Voca take home pay index shows the growth rate of take home pay continues to decline. The impact of the widely predicted interest rate rise this week will be a further squeeze on household finances as mortgage interest repayments rise.”
Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the take home pay index for Voca, said “The Retail Price Index is growing at an annual rate of 4.8 per cent in March compared to the Voca take home pay index which increased by 3.7 per cent. Inflation has now outstripped take home pay growth for the previous seven months. The implication is that a rise in workers’ cost of living is exceeding growth in their wages, which drives living standards down.”
