ClickAJob News

Wage pressures produced the highest rate of acceleration in the quarter to January for more than eight years, according to employment research firm Industrial Relations Services (IRS).

Quarterly wage growth has not advanced at the 3.5 per cent experienced in the three months leading up to January this year since November 1998.

Leaping from the previous quarterly rate of just three per cent, the high median rate of growth has sparked concerns that upward inflationary pressures are continuing to build in the UK economy.

"Our prediction that rising headline inflation would feed through to pay awards by January is borne out by our latest findings," IRS pay and benefits editor Sarah Welfare commented.

"We expect to see a pattern of higher pay awards continue in the first few months of 2007."

Today's predictions from the IRS appear to confirm a report published last month by labour market research firm Incomes Data Services (IDS) which warned that wage settlements would come at the top of the three to four per cent range in the first four months of the year.

With retail price inflation having hit a high of 4.4 per cent in December, employers have been forced to put up wages because of the higher cost of living.

The Bank of England has repeatedly expressed concern about the potential impact such increases could have on consumer price inflation (CPI), the government's preferred overall measure.

This currently stands at 2.7 per cent, despite three rate hikes by the Bank's monetary policy committee (MPC) in the last six months. Analysts say another quarter-point rise could take place by May in an effort to prevent CPI inflation rising above three per cent.