Inflation triggers tough pay rounds

Dearer housing costs helped push inflation, as measured by the Retail Prices Index, to a 15-year high of 4.4% in December 2006 - up from 3.9% the month before.

The Average Earnings Index (AEI) for the whole economy rose by a provisional 3.9% in the year to November. So earnings only matched the rise in prices in November, and with City bonuses set to push the AEI up further in December it may be the same story over again.

Tony Woodley, general secretary of the T&G general union, said it was time that the union raised its sights on pay and adopted a new and more assertive bargaining strategy aimed at winning significant real improvements in wage levels for his members.

"Pay increases are lagging way behind fat cat rewards, productivity improvements and the soaring costs of basics like food and fuel. Our aspirations in this year's pay round are going to be more ambitious than for many years past," he said.

Echoing his mood, Derek Simpson, general secretary of the largest private sector union Amicus, told the Financial Times it would be "a busy year for trade union negotiators seeking to protect their members' living standards".

The NUT teaching union has also called for an inflation-triggered review of teachers' pay.