Public sector pay policy 2024 to 2025

Inflationary Outlook

Inflation data for April 2024 published on 22 May 2024 was 2.3% – slightly above the Bank of England and consensus forecast (2.1%). The Bank are still cautious about the inflation outlook but expect it to remain within this range for the remainder of 2024.

Overall, the outlook for inflation remains uncertain, although it is expected to remain close to the Bank of England’s 2% target. The Bank of England’s latest forecast from May shows inflation increasing slightly toward the end of 2024, and across 2024-25 as a whole, they expect inflation to average 2.4%. The OBR’s March forecasts suggest inflation will fall further and average 1.6% across 2024-25. Looking at the average of the latest independent forecasts for the UK economy reported by HM Treasury suggests inflation of 2.1% in 2024 and 2.2% in 2025. However, the forecasts range from 0.8% to 3.4%, emphasising the uncertainty.^[1]

The average of the Bank of England and OBR forecasts has been used for the inflation reference for this pay policy, as shown in the table below.