The Consumer Prices Index including owner occupiers’ housing costs (CPIH) became the most common inflation measure used by employers when setting formulas for increase(s) under long-term pay deals in 2025. Exactly two-fifths – 40% – of deals (each with pay rises that took effect in 2025) contained formulas that linked pay rises to the CPIH. By contrast, both the Retail Prices Index (RPI) and the Consumer Prices Index (CPI) were used less frequently last year: 30% of the subsequent increases under long-term pay deals referenced the RPI and exactly a fifth (20%) used CPI. A small number (one-in-ten) of increases in our sample for 2025 involve a slightly different approach that considers both the average RPI and CPI. This picture has changed markedly over the past decade when the RPI was most common. For example, in 2016, 92% of the subsequent increases under long-term pay deals monitored by IDR involved a link to the RPI. The remaining proportion (8%) referenced the CPI and no increases in the sample referenced the CPIH.
