UK pay rises 'set to reflect rising inflation'

UK pay rises have remained at 2.9% for the past three months but look set to increase because of higher interest rates, according to a new report today.

Headline inflation, currently 3%, is higher than average pay increases for the first time in a year.

Research by pay analysts Industrial Relations Services showed that wage rises in 188 firms in the three months to June ranged mainly from 2.5% to 3%.

Pay deals were higher than a year ago and were slightly higher in manufacturing firms compared with the service sector.

Sheila Attwood of IRS said: “The upturn in headline inflation – recorded in both May and June this year – has yet to filter through into pay settlements.

“Now that inflation is outstripping the level of pay awards, employees will be looking for higher increases to at least bring them in line with the rise in the cost of living.”