1. What is Real Wage?

Real wage measures the purchasing power of nominal wages by adjusting for inflation using the Consumer Price Index (CPI). It shows how much goods and services the wage can actually buy.

2. How Does the Calculator Work?

The calculator uses the real wage formula:

Where:

• Nominal Wage — Current wage amount in GBP
• CPI — Consumer Price Index (base year = 100)

Explanation: The formula adjusts nominal wages for inflation to show their true purchasing power.

3. Importance of Real Wage Calculation

Details: Real wage calculations are essential for understanding changes in living standards, comparing wages across time periods, and making informed economic policy decisions.

4. Using the Calculator

Tips: Enter nominal wage in GBP and the current CPI value. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between nominal and real wage?
A: Nominal wage is the actual amount paid, while real wage adjusts for inflation to show purchasing power.

Q2: Where can I find CPI data for the UK?
A: The UK Office for National Statistics (ONS) publishes monthly CPI figures.

Q3: What base year is used for CPI?
A: The base year varies (currently 2015=100 in UK). Ensure your CPI value matches the base year of your comparison.

Q4: Can I compare wages from different years?
A: Yes, by converting both to real wages using the appropriate CPI values for each year.

Q5: Why multiply by 100 in the formula?
A: This scales the result to match the CPI base year (where 100 represents the price level in the base year).