Inflation increase will put more pressure on employers to raise wages

A jump in inflation revealed this week will put further pressure on employers to raise wages, according to the Chartered Institute of Personnel and Development (CIPD).

The Office for National Statistics revealed that the Retail Price Index rose from 4.2% to 4.6% in February.

The interest rate was increased from 5% to 5.25% in January in an attempt to curb inflation.

John Philpott, chief economist at the CIPD, said: “If the January rate hike was intended as a warning to pay bargainers in the busy winter pay round, it may have had a perverse effect in the short-run.

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“Fortunately, CIPD/KPMG pay surveys and other evidence suggest that pay settlements remain modest. But with the cost of living rising sharply in February, the latest inflation figures raise the possibility that the winter pay round may have carried a sting in its tail.”