Low inflation is keeping UK wages down and workers in the manufacturing industry are seeing the lowest pay rises, a survey has suggested.

Manufacturing companies gave their staff pay rises of 2.7% on average during April to June, well below the 3.6% offered in the service sector.

These companies are not making the profits that they were, we've got an era of profitless prosperity

Digby Jones, CBI

The increases were just a touch above the record low pay rises seen in the first three months of the year, of 2.4% in the manufacturing sector and 3.4% in services.

According to the Pay Databank survey compiled by the Confederation of British Industry (CBI), the low wage inflation is a result of low consumer price inflation and the weakness of the global economy.

A year ago, manufacturing pay rose 2.8%, while the service sector received a 4.1% increase.

However, the pay figures stand in stark contrast to executive pay at the UK's biggest companies, where base salaries soared on average by 9.3% over the past year to �574,000 - despite falling profits and share prices.

When cash bonuses were included, UK bosses saw their salaries jump by an average of 11.1% to �869,000, according to a recent survey of FTSE 100 companies conducted by the Monks Partnership.

No profit, no pay rises

The CBI cites three reasons for the low settlements for employees.

Worries about the economy have turned consumers into bargain hunters.

As a result, companies find it difficult to pass higher costs on to consumers, which forces them to press for low wage settlements.

And with inflation low and economic prospects uncertain, workers in turn are not pressing for big pay rises.

Service sector firms in particular say that low inflation and low profits are keeping wages in check.

The CBI's director general, Digby Jones, told the BBC that there was "no way in which manufacturers and in some cases the service industry can get their prices up, and therefore where there's not more coming in on one side, only that much can go out on the other."

"These companies are not making the profits that they were, we've got an era of profitless prosperity out there."

Doug Godden, head of economic analysis at the CBI, said: "It is still tough out there for firms, particularly for manufacturers."

The CBI believes that the low wage inflation should persuade the Bank of England to keep interest rates low.

"With pay rises still so low the Bank of England has no reason to put up interest rates at the moment", Mr Godden said.

And Mr Jones reinforced the point, suggesting that it might be the right time for the Bank to cut rates instead.