Take-home pay fails to keep up with inflation

INCREASES in take-home pay remain "sluggish", with real household spending power eroded by rises in the price of essential goods and services.

Take-home pay rose by 0.8 per cent last month, compared with 0.6 per cent in June, well short of inflation rates, according to research published yesterday by automated payments firm VocaLink.

The company's chief executive, Marion King, said: "Since October 2009, prices have been going up faster than people's take-home pay, which is worrying for the average family on a tight budget.

"The gap has narrowed a little this month, but the difference between annual growth in inflation and the VocaLink Take Home Pay Index is 2.4 per cent."

Douglas McWilliams, chief executive of economics consultancy Cobra, added: "Inflation is likely to remain elevated over the coming months due to the impact of increases in indirect taxes, oil prices and the depreciation of sterling." This will all add to the pressure on household budgets.