Next year, the private sector will surely be affected by the rising inflation. According to a recently published report, wages bills will be pushed up between 3% and 4.5% next year.

Pay researchers from Income Data Services (IDS) said that the National Treasury strives to keep a balance on spending as the public sector pay will rise with only 2 per cent.

According to IDS, energy costs will push the retail price index (RPI) up to 4 per cent, at the end of this year. This would seriously affect customers, as there will be some important bills to pay in January and April.

The editor of the report declared with precaution: "The RPI inflation measure is the key to pay setting in the private sector. Inflation close to 4% will be a very strong upward pressure on the level of pay settlements."

The increasing trend of the inflation could produce panic justified by the heavy growth in wage levels. This will urge the Bank of England's Monetary Policy Committee to raise interest rates once again in 2006.

Back in August, the benchmark was raised by 4.75%. And now, the analysts foresee another increase, in November, of 0.25 per cent.

Additionally, the retail price index also increased by 3.4% from 3.3 per cent, where it was in July.

The Consumer Prices Index (CPI) also rose up in August from 2.4% to 2.5 per cent. The Bank of England is now urged by the Government to sustain CPI inflation at the level of 2%.

In 2006, the average level for private sector wage increases has been 3 per cent. This could only make glad the entrepreneurs as in the UK there’s a well-known consumers’ trend to easily spend their money. Manufacturers and businessmen will surely benefit.