Wage inflation is one of the factors considered by the Monetary Policy Committee of the Bank of England in its deliberations over the setting of interest rates (see Chapter 12). The accepted view is that wage rises of over 4.5 per cent are inflationary. In the year to February 2004, wages rose by 4.9 per cent which is more than the acceptable rate. For the first time for a number of years, wages in the private sector (5.5 per cent) rose by more than wages in the public sector. Wages in the service sector rose by 5.2 per cent. These figures have led to expectations that the interest rate might rise