Inflation is slowing, can I still ask for a pay rise?

The inflation rate, which has ballooned for the past 18 months, has slowed to 6.8%, and now record-breaking wage growth has overtaken it. 

This means that the rate at which essentials are getting more expensive has slowed, while wages have, on average, gone up faster than since records began. 

“If we get through this, people will really start to see the benefit in their bank accounts, in their pockets, as inflation starts to fall,” Rishi Sunak told journalists in response to the new wage figures, speaking on a hospital visit in Milton Keynes on 16 August.

• Will giving workers a pay rise really make inflation worse? We asked expert economists
• How does sick pay in the UK compare to the rest of the world?
• When will the cost of living crisis end and will prices in the UK ever go down?

However, food inflation remains high at 14.9%. The Resolution Foundation said that the average food bill has now increased by £960 since 2019-20, so you’ll likely still feel the harsh effects of inflation on your bank balance.

“The UK has experienced the third largest price pressures of any advanced economy since the pandemic,” said James Smith, Research Director at the Resolution Foundation, “This highlights just how painful this cost of living crisis continues to be.”

So if you’re wondering whether it’s fair to ask for a pay rise to cope with rising costs, the answer is ‘yes’.

Here’s why inflation has such a big impact on pay, and how you can ask for the pay rise you need according to a career expert with over 12 years’ experience signing off on pay rises at a leading UK bank. 

What is the inflation rate and how does it affect pay?

The inflation rate fell to 6.8% in July, down from 7.9% in the previous month, driven by a record drop in gas prices. This means that the rate at which things are becoming expensive has slowed. 

However, food prices rose by more than double the inflation rate, up by 14.9% on the previous year, and the UK inflation remains the highest among the G7 group of advanced economies.

• The national living wage, real living wage and minimum wage explained
• £15 minimum wage: Who is calling for it and could it happen?
• Minimum wage UK: How does Britain compare to the rest of the world?

“Any fall in the rate at which prices are increasing is welcome,” said chief economist at the Resolution Foundation, Alfie Stirling, “but the reality is inflation of 6.8% will bring little respite to the 3.1 million low-income families with children already making sacrifices on essentials like food, basic toiletries, and adequate clothing.”

Who got a pay rise in 2022 and 2023?

After 15 years of wage stagnation, earnings are rising at record levels, as pay surged by 7.8% in the April and June period compared to the same time last year, according to official statistics. 

Nye Cominetti, senior economist at the Resolution Foundation, said the acceleration of pay growth meant an “end to Britain’s painful 18-month pay squeeze”. 

However, those pay rises have not been spread evenly throughout the economy. Rocketing pay for bankers has pushed up the averages. Those working in the finance and business services had the largest annual growth rate of 9.4% on average, followed by the manufacturing sector at 8.2%.

It is also important to remember that wages in Britain have stagnated since the 2008 financial crisis, which pushed the country into recession. Real regular pay is, on average, £230 per week lower than if real pay growth had continued at the rate of 2.1 per cent seen before the crash, according to Resolution Foundation analysis. 

“This unprecedented 15 year stagnation has cost average workers £230 a week – and left Britain a far poorer country,” Cominetti added. 

Furthermore, research released by the TUC in May showed that the only sector of the economy where pay levels have managed to outstrip inflation since the 2008 financial crisis is the finance and business services sector. So, again, that sector is pulling up the overall figures while others further down the pay scale reckon with a very real cost of living crisis.

In the private sector, pay rose on average by 8.2% in the 12 months to before the April –  June period, higher than the 6.2% seen in the public sector. 

How much of a pay rise should you ask for?

Any yearly pay rise at or below the current rate of inflation is, in real money terms, a pay cut. So you might wish to request a percentage rise to match inflation, and an additional amount to reward your achievements. 

For every £100 you earned last year, you would have to earn £106 this year for your money to have the same value, according to Office for National Statistics calculations. You can use this calculator to find out how much of a pay rise you should ask for if you think it should rise to match inflation.

• Strike dates 2023: From trains to passport offices, here are the dates to know
• What is my right to strike?
• 6 common myths about strike action, from salaries to public support

However, while it might be tempting to justify your request for a pay rise by referring to the increasing cost of living and inflation, career coach Samantha Lubanzu suggests steering away from this to focus on your individual value. 

Lubanzu, who has 12 years experience working as a HR Business Partner at Barclays Bank, explained that sadly, rising inflation is something that everyone is facing, so should not be the basis for your request. 

Get the latest news and insight into how the Big Issue magazine is made by signing up for the Inside Big Issue newsletter

“Most organisations will be having their HR team working on how they can bring their pay up in terms of inflation rises,” she said. This has traditionally been at a rate of 3%, though this is well below current inflation rates. 

When calculating the rise you want, she recommends looking at what competitor organisations are paying, alongside inflation, the cost of living, and what you need to live the lifestyle you want. Make your request in terms of a percentage rather than an amount of money, she adds, as this is the language the finance or HR team will use. 

How to ask your boss for a pay rise?

When it comes to having the conversation, Lubanzu suggests sending your line manager a short email requesting a one to one meeting to include a salary conversation. It’s best to do this face-to-face, or at least over video call. 

“The main thing is to focus on what you’re personally bringing to the role,” says  Lubanzu, who suggests asking yourself: What do you bring to the role? How can you demonstrate that you’ve been consistently performing highly? And what can you, and only you, do for the organisation?

Your support changes lives. Find out how you can help us help more people by signing up for a subscription

“You need to focus on your individual contribution to the organisation and how that differentiates you to competitors outside the organisation – so the reasons why they don’t want to lose you,” she continued.

​​To prepare, you could write a script and practice by recording yourself on your phone and listening to it back.

What to do if your request is denied

If the answer is no, your first reaction should be to ask for a detailed justification for the decision, and ask what would make it a yes in future, says Lubanzu. 

Stay positive, thank them for their consideration, and put steps in place that you can take so that you can  go back in a few months time with an even stronger case. 

It is also important to remember that other company benefits can offer value to your working life beyond income. Lubanzu recommends thinking about what other benefits the company could offer you that they might be more willing to concede on.

“It’s really important to understand that money is never really the main driver for individuals to stay in an organisation, there are so many other benefits they need to look at,” she says. 

• All the cost of living help for households
• How will the energy bill freeze work, and how will it affect me?
• Energy bills are still soaring – so here’s where to get help

The need for a comprehensive sick pay policy has been drastically highlighted over the pandemic, with statutory sick pay (the minimum amount set by the government that employers must pay), woefully inadequate for anyone to live on. 

While your company may deny a pay rise, they may concede to increasing your holiday allowance, improving sick pay policy, or introducing policies to support employees going through the menopause, experiencing bereavement or juggling care commitments. 

Allowing flexible working, funding a qualification or allowing a sabbatical are other ways to boost staff wellbeing that might make staff more eager to stay. 

And if a pay rise isn’t possible, a cut to working hours in the form of a four-day working week could be a compromise.

The Big Issue’s #BigFutures campaign is calling for investment in decent and affordable housing, ending the low wage economy, and millions of green jobs. The last 10 years of austerity and cuts to public services have failed to deliver better living standards for people in this country. Sign the open letter and demand a better future.