Inflation 'driving up wage claims'

There are already signs that high inflation is starting to feed into wage demands and firms' prices, Bank of England hawk Andrew Sentance said yesterday, as he repeated his call for higher interest rates.

In a BBC radio interview, Sentance said the weak pound was contributing to price pressures, which have driven inflation to double the central bank's 2 per cent target. "That is generating additional imported inflation and the danger is it becomes something that people start to expect and it starts to influence wage increases and the price-setting of companies more generally," he said.