Factory pay subdued as inflation surges

LONDON (Reuters) - Pay deals at factories held steady in the three months to July even though inflation accelerated to its fastest pace since the early 1990s, a survey showed on Thursday.

The Engineering Employers' Federation, which represents manufacturing, engineering and technology businesses, said the average level of pay settlements was 3.1 percent, the same as the rolling three-month average for the past two months.

This result is likely to be welcomed by Bank of England policymakers since subdued wage growth is crucial if the next move in interest rates is to be down. However, it also highlights that take-home pay for many Britons is now falling in real terms.

Retail price inflation rose to 5.0 percent in July, its highest rate since 1991, while consumer price inflation leapt to a series high of 4.4 percent, more than double the Bank of England's target.

The EEF survey, which covered more than 23,000 employees, chimes with official data suggesting rising unemployment is making workers more reluctant to argue for big wage rises.

The number of Britons out of work and claiming jobless benefit rose in July for a sixth consecutive month and by the largest amount since 1992.