Negotiated pay awards in the last three months have risen sharply, prompting fears that inflation will rise.
Average private sector pay deals in the last three months rose to 4% annually, up from 3.5% earlier in 2007, according to Incomes Data Services (IDS).
On Thursday the Bank of England cut interest rates to 5.25%, but said it was still concerned that inflation was above its target rate of 2%.
The Bank has previously said that pay rises above 4.5% would be inflationary.
Pay rises had been expected to drop as the economy slowed, but new pay deals in transport and construction pushed the average up.
"In spite of - or perhaps because of - the uncertain economic outlook, the upward pressure on private sector pay awards persists," Ken Mulkearn from IDS said.
Good news for those in the private sector but what about the rest of us? And what long term effects will this have on the economy we share?
Make sure you register now with JumpToJobs.co.uk to get the most out of your career.
JumpToJobs.co.uk currently offers 724,199 jobs from job boards, recruitment agencies and corporate websites, 24 hours a day, 7 days a week.
The JumpToJobs.co.uk Team