Pay settlements raise inflation fears - papers 2nd Feb

Median pay deals monitored by pay consultant Incomes Data Services (IDS) rose from 3.05% in December to 3.5% last month. Median settlements had been close to 3% through most of 2006, while average earnings, including bonuses, rose by 4.1% in the year to November. The Retail Prices Index rose by 4.4% in 2006, a 15-year high, which ensured long-term deals promising inflation-linked rises this year are likely to result in earnings going up at a rate that will alarm the Bank of England’s Monetary Policy Committee, says the paper. Ken Mulkearn of IDS said if inflation stayed high until ...