VocaLink’s Take Home Pay Index shows that, although average sector growth rates improved in the three months ending November, rising from an 18-month low of 0.6 per cent to reach year on year growth of 0.9 per cent, inflation has grown considerably faster.
The Consumer Price Index, currently at 2.7 per cent, is eroding take home pay to the extend where VocaLink predicts a strong, negative impact on retail sales in December.
Retail sales rose just 0.4 per cent, year on year, in November, according to the British Retail Consortium and KPMG.
VocaLink chief executive officer David Yates says: “Take home pay growth has been lower than consumer price index inflation since July, which means employee spending power continues to decline in real terms.
“While November saw a small increase in year on year retail sales, as we enter the festive season, it will be interesting to see how the sustained disparity between inflation and take home pay impacts on high street Christmas shopping spending.”