Britons need £1,200 pay rise to keep up with inflation despite CPI rate falling to 2.3%

Figures from the Office for National Statistics (ONS) published last week revealed that the CPI inflation rate for the 12 months to April 2024 eased to 2.3 per cent over the period.

This is close to the Bank of England's desired two per cent target with the central bank having raised interest rates to 5.25 per cent in an attempt to bring inflation down.

It appears to have contributed to this latest drop but British workers appear to still be getting a raw deal based on easyMoney's analysis.

Based on the average rate of inflation for 2024 up today, the platform has forecast that by the end of the year, year-on-year inflation will stand at 3.5 per cent.

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To match this in earnings, the average salary would have to be raised by £1,239 to hit £36,643 by the end of this year.

In comparison, , the average salary rose by 6.4 per cent to £33,449 in 2021 while inflation hit 9.1 per cent.

As such, salary growth remained negative 2.7 per cent behind inflation despite a solid pay rise being given.

Similarly, 2023 earnings saw another increase of 5.8 per cent to reach an average of £35,404 per year.

Despite this hike, wages were up against annual inflation of 7.3 per cent per cent which means earnings behind inflation by 1.5 per cent.

As such, experts are urging workers to ask their bosses for a pay rise as the economy appears to be recovering from the cost of living crisis.

Jason Ferrando, CEO of easyMoney, explained: “With inflation finally starting to slow after three years of remarkable growth, now is the perfect time to be asking for a pay rise in line with inflation.

"This bump in earnings would only need to measure at least 3.5 per cent as opposed to almost 10 per cent a couple of years ago, so bosses and companies are going to be far more likely to oblige than they might have been in the recent past."

"The downside of this is, of course, that a rise in line with inflation isn’t as much this year as it would’ve been before, so you might want to look at investing to bolster your income.”

As well as this, experts from easyMoney are recommending people invest any pay rises they get in an ISA.

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Through the ISA personal allowance, savers will not pay tax on the interest you earn from an ISA investment of up to £20,000.

The different accounts someone can get include a traditional cash ISA which is more or less a savings account with interest rates usually between four to six per cent.

However, experts are reminding people can get stronger returns can come from alternative ISAs such as Innovative Finance ISAs (IFISAs).

These allow savers to use their personal ISA allowance to invest in peer-to-peer lending and can generate higher returns.