LONDON - Average starting pay for British jobs rose in May at the fastest pace in four months despite a 20% annual fall in the number of jobs on offer, figures from hiring platform Indeed showed, adding to the mixed picture on the inflation outlook.

The 6.5% rise in advertised starting pay compared with a year earlier outstrips the 6.0% rise in official wage data for the three months to April. That was the joint smallest increase since September 2022, although still twice the rate the Bank of England views as consistent with low inflation.

Uncertainty about whether pay growth is slowing materially remains a key factor behind the BoE's reluctance to cut interest rates from the current 16-year high, despite the return of headline inflation to its 2% target last month.

But past double-digit inflation means rising wages have not yet translated into an economic feel-good factor, adding to Prime Minister Rishi Sunak's bleak prospects in next week's election.

Some economists worry that the large number of people who have dropped out of Britain's job market since the COVID-19 pandemic is storing up inflation problems for the long term.

However, the Indeed data showed the number of unfilled jobs - often seen as an indicator of future wage and inflation pressures - is 0.9% below its level just before the COVID-19 outbreak, after falling by a fifth in the past year.

"The UK labour market has continued its adjustment in recent months, though it remains somewhat tight and still competitive for employers in many sectors," said Jack Kennedy, senior economist at Indeed.

The biggest pay rises occurred in typically low-paid sectors such as childcare, cleaning, security work, retail and hospitality, where many workers benefited from a nearly 10% rise in the minimum wage in April.

The pandemic and post-Brexit changes to immigration policy had also increased hiring difficulties for low-paid roles, Indeed said.

The biggest labour shortages, based on the length of time jobs were advertised for, were for veterinary, engineering, aviation and software roles.

(Reporting by David Milliken; Editing by Paul Simao)