Average pay rises have increased in the last few months, with one in four deals worth at least 4%, according to a report by Incomes Data Services.

A study of 186 settlements, mainly in private firms, shows a slight rise in the average increase from 3.42% to 3.5%. One in three deals agreed in April was at 4% or above.

Ken Mulkearn of Incomes Data Services says: "Wage setters are currently faced with the pressure of reviewing pay levels against much higher levels of inflation than before."

Meanwhile, a report has shown that the national minimum wage has helped boost productivity as well as wages because it has led to a fall in sickness absence.

The study suggests employers have been more willing to accept the statutory rates because of the positive effect on attendance levels.