Inflation occurs when the prices of goods and services rise over time, typically measured over a year. Instead of tracking individual items, inflation measures the average change in a large basket of goods, expressed as a percentage. The government has set a target for inflation at 2% via the Bank of England, but in January 2023, the rate reached 10.1%.

If prices rise while your wage remains the same, your purchasing power decreases. When wages increase at the same rate as inflation, this is known as a nominal wage increase—your wage goes up, but its real value remains unchanged. Real wages, however, take the effect of inflation into account. You can calculate the change in real wages by subtracting the inflation rate from the change in nominal wages.

Reasons to Ask for a Pay Rise:

  • New responsibilities; significant achievements; being underpaid; developing new skills; mentoring other employees; receiving job offers from elsewhere; increased working hours.

Top Tips When Asking for a Pay Rise:

  • Be specific about your achievements and how you contributed to the company’s success
  • Demonstrate the future value you can bring to your employer
  • Highlight your soft skills and internal contributions
  • Use factual evidence to support your request
  • Prepare key points before scheduling a meeting with your manager
  • Communicate clearly and concisely.