LONDON (Reuters) — Wages in Britain are rising at their fastest in seven years as employers scramble to fill vacancies and consumer confidence is riding high, two reports showed yesterday, adding to pressure for higher interest rates.Most economists expect the Bank of England to hold rates pat this week after raising them to a six-year high of 5.5 percent in May but reckon another hike can't be too far off given continuing signs of inflationary pressure in the economy.

The KPMG/REC report on jobs showed wages for permanent staff in May rose at their fastest rate since June 2000 when British interest rates were pegged at six percent and the world economy was booming on the back of the dot-com bubble.

Vacancies, meanwhile, continue to climb as employers still can't fill positions for both permanent and temporary staff. They shot up at their fastest in nearly three years.

"Pay pressures are intensifying," said Michael Carter, a partner at KPMG.

A separate survey from wage processors Voca, also out yesterday, showed the opposite but analysts say the BoE is twitchy about inflation and a hike to 5.75 percent in the next few months looks a sure bet.

"The question appears to be when, rather than will, the Bank of England raise interest rates again?" said Howard Archer, economist at Global Insight.

There is a very real possibility that the Bank of England could raise interest rates by 25 basis points for a second month running tomorrow."

The BoE itself said that all nine Monetary Policy Committee members were agreed that another rate hike would be needed if the economy developed in line with their forecasts. Some policymakers had even considered a 50 basis points hike in May.

Even so, consumers don't seem to be too worried despite borrowing costs already having gone up a full percentage point in the last year.

Quite the reverse. Consumer spirits rallied sharply, according to the Nationwide building society. Its index shot up nine points in the week the BoE last raised interest rates, perhaps buoyed by Prime Minister Tony Blair announcing his departure date.

What's more, the survey showed people expect house prices to keep going up strongly — something that might worry policymakers who are hoping the wind has finally come out of the sails of the nation's property market where prices have trebled in a decade.

British newspapers were full of reports this week of a one-bedroom flat in London going on the market for more than $3 million. Unrepresentative as that may be, continued housing market strength has confounded experts who have long been predicting a slowdown.

And while a survey by the British Retail Consortium showed shop prices only 0.4 percent higher in May than a year earlier, down from a 0.8 percent rise in the month before, food prices continued to rise sharply. This is likely to pose an upside risk to inflation in the coming months.

Arch-dove David Blanchflower cited it as a key reason for backing a rate hike last month only two months after he had called for a cut.