Bank of England Concerned About Inflation as Wages Become Largest Driver of Price Rises

The Bank of England is concerned about inflation, as higher wages are the "biggest driver of price rises" for two-thirds of businesses, according to a report by the British Chambers of Commerce.

The bank has previously warned about high wage settlements as it looks to control inflation.

The most recent consumer prices index (CPI) measure was unchanged at 8.7%, but there was a surprise leap in the pace of so-called core inflation.

Financial markets now forecast bank rate peaking above 6% due to the core inflation data and the fact that wage growth is running at an annual rate of 7.2%.

The government has a target to halve inflation this year, but it is currently feeding jitters on whether it can be met.

The BCC's survey findings suggest there is a chance that wage growth has further to go as the official figures from the Office for National Statistics currently only cover up to April.