23/06/2008
Chancellor Alistair Darling has urged employers to be cautious when awarding pay rises. His advice followed the Bank of England's announcement that inflation has reached 3.3 per cent. Mr Darling told the BBC: "Pay awards in both the private and public sector have to be consistent with our inflation target, which is two per cent." "The last thing on earth you want is to allow inflation to take hold again because rising prices would erode peoples' living standards and nobody want that." The Bank's governor, Mervyn King, in a letter to Mr Darling last week, said inflation had jumped because of rising fuel and food prices. In his reply, Mr Darling agreed with his explanation but added: "While I recognise the considerable uncertainties surrounding prospects, it is likely I will receive further open letters from you."
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