LONDON (AFP) - Wage inflation in Britain accelerated to the fastest pace for two and a half years in August after a steady decline in unemployment to a series of 29-year lows, official figures showed.
Average earnings, excluding bonuses, rose by 4.3 percent in the three months to August, up 0.1 percentage points from the July figure, the office of National Statistics said.
The August rate is the highest since April 2002. The main reasons given for the rise were improved pay deals in local government and private sector education.
Analysts said the data meant that a further rise in interest rates by the Bank of England this year could not be ruled out, following five quarter-point rises since November.
Some economists believe that British interest rates have already peaked this year, following signs of a cooling of the housing market and a slowdown in consumer activity. Others expect another hike in November.
"The Bank of England will have particularly noted the rise in underlying annual average earnings growth," said Howard Archer, economist at the Global Insight consultancy firm.
"Even so, this is still just below the 4.5 percent level that is normally considered compatible with its inflation target," he added.
Meanwhile the number of people claiming unemployment benefit in Britain fell for the 16th month in a row in September, though the decline was the smallest over that period.
The claimant count fell by 200 to 834,000, its lowest level since records began in 1975. The August decline was revised to 2,100 from the previous 6,100 estimate.
The unemployment rate held steady at 2.7 percent, its lowest level since April 1975.
Under the International Labour Organisation's broader measure, British unemployment fell by 51,000 to 1.387 million, or 4.7 percent of the workforce, in the three months to July from the previous three-month period.
On Tuesday official figures showed that British consumer price inflation slowed to an annual rate of 1.1 percent in September from 1.3 percent in August, well below the 2.0-percent target used by the Bank of England.