Pay deals are running at 3.2%, more than 1% below retail price inflation, the figure used by union wage negotiators, according to a new report.
Deals in private firms were slightly higher at 3.5%, according to an analysis of 300 settlements in the last three months by Industrial Relations Services (IRS).
Increases ranged mainly from 2% to 4%, with more than two thirds of awards higher than a year ago.
Nine out of 10 people claim the cost of living is rising at nearly three times the rate of official inflation figures, a survey shows.
Despite Office of National Statistics (ONS) figures showing inflation is currently running at 2.5%, consumers feel they are really facing price hikes of 7.3%, according to financial website Fool.co.uk.
Overall two out of three people say their personal rate of inflation is between 4% and 9%, while one in five claim it is between 10% and 15%.
Inflation has gone past 3%, forcing the Bank of England’s governer to write a letter of explanation to Gordon Brown.
Controlling inflation has been at the very heart of the government’s claim to economic competence.
But today for the first time in 10 years, the rate of inflation rose above Gordon Brown’s target.
The Bank of England has the job of meeting that target: the Governor’s now written the Chancellor, explaining what’s gone wrong.
In his letter, Mervyn King talks of growing price pressures within the economy, and most economists believe more interest rate hikes are imminent.
The cost of living has risen at its fastest rate for at least 10 years, forcing the Governor of the Bank of England to write a letter of explanation to the Chancellor for the first time.
The Consumer Prices Index (CPI), the official measure of inflation, rose to 3.1% last month, more than 1% above the Government’s target for inflation.
Governor Mervyn King has to write an open letter to Gordon Brown if CPI hits more than 1% above or below the 2% target.
The Bank of England took everyone by surprise today by raising interest rates to their highest in five-and-a-half years, saying it was worried about inflationary pressures in the economy.
In a move immediately slammed by industry groups, the Bank effectively gave warning it would not tolerate inflation-busting wage deals in the current pay round or continued rapid growth in house prices.
The Bank’s monetary policy committee had already raised the cost of borrowing twice in the past six months as the economy grew more strongly than expected in the second half of last year, and as rising utility bills pushed up inflation to well above its government-set target of 2%.