How do I tell if my pay rise makes me better off?

Question

Allow me to explain...

I've recently received my annual pay review at work, and I frankly consider the raise I got to be very low (2.6%).

Now I think it is a reasonable thing to say that if my annual pay rise is below the rate of inflation, then in real terms I'm actually being paid less than I was this time last year (since the raise I have received does not compensate for the rise in the cost of goods and services over the last year).

As things currently stand in the UK the Consumer Price Index is 2.5%, however the Retail Price Index is 4.3%. So I want to know which one of these it's fairest to compare my pay rise to, and why?

Obviously if I go by the CPI then I'm *slightly* better off, but if I go by the RPI then I've actually taken a pay cut (in real terms)... so I need some clarification! Am I better or worse off?

I'm hoping to put a case to my boss for a better deal, so the reasons for your answers would be greatly appreciated!

Answer 1

I'd say about the same. The CPI level is lower mainly because the price of Gas is falling, so you will save some money there but then for most other things its probably rising nearer to the 4.3% level.

Seems a bit of a harsh raise but then you wont get a lot of sympathy from me as i'm currently unemployed

Answer 2

Your reasoning is good, but, sadly, it's not all about you. Your employer will have to have been making profits at the same increase in order to pay you the increase.

Answer 3

EASY !

At the end of the month, if your bank Balance is GREATER than last months you are better off and if you keep this up and you will soon be RICH.

IF it is LESS than last month you are worse off and had better stop spending or you will soon be POOR.

Answer 4

Think yourself lucky, come October all the staff where I work will only get a 2p payrise!!!