PAY rises are starting to increase in line with higher inflation, a new report showed today.

The shift in higher settlements has been "modest" but levels are starting to nudge up, according to pay analysts Incomes Data Services.

Just over half of deals in the first three months of the year were worth less than three per cent but for April alone the figure dropped to less than two in five.

Public sector pay has risen in some cases because of relatively high review body awards, but pay in private firms is also on the increase because of rising inflation, said the report.