British workers' pay packets rose faster than expected in the three months to June, but the jobless rate hit a six-year high, official data showed.
The Office for National Statistics said average earnings rose 4.3 per cent in the three months to June, above forecasts for 4.1 per cent, boosted by generous rises in manufacturing wages and City bonuses.
The Bank of England is worried that high energy costs may spark a round of inflationary pay rises, but has said wage growth below 4.5 per cent is consistent with stable prices.
Peter Dixon, an economist at Commerzbank, said he was surprised by the strength of earnings growth. "But a 4.3 per cent rate is very much consistent with a level maintaining the inflation target. So there's no need to panic."
Bonuses in the financial sector, particularly in the month of June, were largely responsible for the increase in private sector services pay to 4.5 per cent, the ONS said.
For the month of June alone, wages in private sector services rose 5.4 per cent after 4.7 per cent in May.
Manufacturing wages increased by 5.9 per cent in the three months to June - the highest since November 1992, when it was also 5.9 per cent.
The data also showed the internationally comparable jobless rate rose more than expected to 5.5 per cent - the highest since April-June 2000 - suggesting the labour market is becoming slacker.