A skills shortage could lead to higher wages and quicker inflation

According to the Office for National Statistics, the number of unemployed rose by 13,000 to 1.7 million in the three months between January and March.

However, the report also showed that the number of people claiming jobless benefit dipped by 15,700 to 890,000.

Analysts said that the figures would do little to ease concerns that labour shortages may buoy wages and inflation.

'Mixed data'

Last week the Bank of England raised its main interest rate by a quarter of a percentage point to 5.5% as it looked to slow price growth.

Financial markets had been hoping that Wednesday's unemployment figures would give a clue to the inflationary pressures that would affect the job market in coming months.

In the event, the numbers failed to deliver a conclusive signal one way or the other.

"Mixed data, and therefore mixed messages for the Bank of England," said Gavin Redknap, an economist at Standard Chartered.

His view was echoed by Peter Dixon of Commerzbank.

"It's still a very tough call on whether interest rates need to rise again and these numbers don't make the case either way," Mr Dixon explained.

Pay day

One bright spot was the fact that the Office for National Statistics showed that the pace of average earnings growth slowed in the quarter to March.

The average wage in the UK rose by an annual rate of 4.5%, compared with the previous month's 4.6% increase, the statistical office said.

However, analysts warned become too optimistic, despite early signs that inflationary pressures from the labour market may be easing.