Britain's Morrisons raises pay in tight labour market

LONDON (Reuters) - Morrisons on Friday became the latest British supermarket group to raise pay for store workers as competition to attract and retain staff hots up.

UK employers are offering higher pay deals in the face of staff shortages and accelerating prices, as the Bank of England watches those settlements closely as it weighs the risk that a jump in inflation to a 40-year high of 9% becomes embedded in the economy.

Morrisons, Britain's fourth largest grocer behind Tesco, Sainsbury's and Asda, said that from October it will pay its over 80,000 store and manufacturing staff a minimum of 10.20 pounds ($12.56) an hour. Workers in London will get a minimum of 11.05 pounds.

Morrisons said the deal makes it the highest paying UK supermarket for store staff. In March, Sainsbury's raised the basic hourly pay of its store workers to at least 10 pounds an hour. Tesco is paying a minimum of 10.10 from July. Morrisons, owned by U.S. private equity firm Clayton, Dubilier & Rice, said the pay deal is subject to approval, via a ballot, of staff who are members of trade union Usdaw.

($1 = 0.8123 pounds)

(Reporting by James Davey; editing by John Stonestreet)