Inflation-busting wage rises, looming strikes and soaring food prices undermine Chancellor's desperate plea for pay restraint

Rocketing food costs, inflation-busting wage rises and looming strikes look set to undermine Alistair Darling's plea for pay restraint.

The Chancellor has warned of a damaging spiral of inflation hitting Britain if millions of people do not accept below-inflation increases this year.

But a series of above-inflation rises raised fears that some firms are turning a deaf ear to the Government's appeal to keep down wages as petrol, food and energy prices soar.

New figures also out today show that the cost of a shopping basket of food has rocketed by 12.6 per cent during the past year, according to researchers.

It is further bad news for the nation, which has recently suffered the fastest increase in the cost of food and fuel since the 1970s, the Daily Mail revealed last week.

The Daily Mail Cost of Living Index, published last Tuesday, found that the cost of a shopping basket of 40 essentials has increased by 19.8 per cent over the last year.

The latest figures by the Grocer are based on the average cost of a 100-item trolley of staple products.

Researchers from the magazine found the cost of these items had started rising more quickly in the past few months because of high fuel costs and increasing ingredient prices. It has risen by 0.8 per cent in the last week alone.

Meanwhile, more than 800,000 council workers today voted for industrial action after rejecting a pay deal - heralding a summer of discontent ahead.

The strike will include school dinner ladies, refuse collectors and classroom assistants to architects walking out.

Nearly 300,000 civil servants are also considering industrial action amid growing anger at pay rises failing to keep up with the soaring cost of living.

Mr Darling is urging tight pay deals from the 'boardroom to the shop floor'.

The Daily Mail Cost of Living Index found that the cost of a shopping basket of 40 essentials has increased by 19.8 per cent over the last year

'We've got to make sure that we keep inflation under control because if we don't, what will happen is that people may get a pay increase but every penny of it will be eaten up by rising prices in the shops,' he said.

But hundreds of tanker drivers supplying Shell petrol stations last week clinched a 14 per cent rise in a two-year deal after going on strike.

Inflation is running at 3.3 per cent, according to the Government's preferred measurement, the Consumer Prices Index.

However, many pay deals are linked to the Retail Prices Index, which includes mortgage interest payments, which is currently 4.3 per cent and has been higher.

The highest pay awards in the three months to April were in energy, water, engineering and chemicals companies, according to IDS Pay Databank.

'The main reason they are now settling so high is because many are part of long-term deals, which means that in the second or third stage of these deals RPI is being used to work out the settlement,' said Lois Wiggins, of IDS.

Other firms are having to give their employees 'kicker' payments as they agreed multi-year deals when inflation was expected to stay subdued.

Summer of discontent: Shell tankers stand idle during the fuel strike earlier this month. Drivers eventually accepted a 14 per cent deal

Unison, the country's biggest union, was today due to announce the result of a strike ballot after hundreds of thousands of town hall workers rejected a 2.45 per cent pay rise.

Heather Wakefield, the union's head of local government, said: 'The offer is simply not enough to help our members cope with the huge rises in the cost of food, fuel and housing,'  she said.

Employers have made it clear the 2.45 per cent is the final offer and have warned that jobs and services will be affected if it is increased.

Prime Minister Gordon Brown has also ordered ministers to give up their 1.5 per cent pay rise this year, but unions argue that business chiefs are still getting big awards.

'Ministers have been silent as boardroom pay has run riot,' said Derek Simpson, of Unite.

'Why should those with the least have to tighten their belts first?'