Wages should increase inline with the cost of living, according to one union leader.

Brendan Barber, general secretary of the Trades Union Congress (TUC), states the new figures which put inflation at a 16 year-high of 3.8 per cent underline the fact that salaries are falling behind the cost of living.

He feels that the "soaring" cost of petrol and food across the country means that families are increasingly concerned about how they will cope.

Mr Barber also believes the theory that increased wages will only make the situation worse is incorrect.

He said: "Claims that decent wages will lead to spiralling inflation are wrong. There is no evidence that pay awards are driving prices upwards now and no evidence that they will do so in the future."

Yesterday, the British Chambers of Commerce warned that the monetary policy must not increase interest rates in an attempt to combat inflation as this would damage the economy.

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