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Frequently Asked Questions
What is the UK inflation rate in 2026?
UK CPI inflation in early 2026 is estimated at approximately 2.8–3.5%, having fallen significantly from the peak of 11.1% in October 2022. The Bank of England targets 2% CPI inflation. For the most current figure, check the ONS monthly CPI release.
How much of a pay rise do I need to keep up with inflation?
To exactly match inflation, your pay rise percentage must equal the inflation rate. With 3% inflation, a 3% pay rise leaves your real wage unchanged. Any pay rise below the inflation rate means a real-terms pay cut — your money buys less than it did before.
Is a 5% pay rise good in 2026?
With UK inflation around 3% in 2026, a 5% pay rise represents a real increase of approximately 1.9%. This is a genuine pay rise in real terms. However, it depends on your sector — some industries have seen higher benchmark increases. Check ONS earnings data for your sector comparison.
How do I negotiate a pay rise that beats inflation?
Come prepared with ONS average earnings data for your sector, your personal performance record, and market salary benchmarks (Reed, LinkedIn Salary Insights). Frame your request around real wage restoration if your salary has fallen behind inflation, plus a real increase for your contribution.
What is the difference between a pay rise and a real pay rise?
A pay rise is any increase in your nominal salary amount. A real pay rise is one that exceeds inflation, meaning your purchasing power actually increases. A 2% pay rise during 5% inflation is a nominal rise but a real pay cut of approximately 2.9% in terms of what your money can buy.