One in three firms plan to implement pay increases in the next 12 months.

That's according to the latest Bank of Ireland Economic Pulse, a survey conducted in conjunction with the European Commission which measures business and consumer sentiment.

Group Chief Economist with Bank of Ireland Dr Loretta O'Sullivan said two out of every five workers is expecting a pay rise in the next year.

"For firms it's about one in three planning to increase basic pay. That does differ a little bit across the sectors; for industry, for services it's about 38% of firms, for retailers it's a bit more subdued at 26%, and construction at 29%.

"In terms of how much they're planning on paying, it's around 2%-4% for the most part. In services and construction some also a little bit higher at more than 4%."

Ms O'Sullivan added a shortage in sourcing labour for the construction is driving up wage growth.

On a variance between business and consumer sentiment, she said the reading for the Economic Pulse in July is the second highest recorded this year.

"Consumer has been ticking up in recent months and is at its highest level since pre-Brexit. Business is still off its pre-Brexit levels but did improve this month with an uptick in industry services and construction.

"Retailers are a bit more subdued, and uncertainty being a key factor there".

The BoI Chief Economist said both retailers and consumers are still cautious over the geo-political climate.

"What we're seeing is that the two big curve balls from last year, the Brexit vote and Trump getting into the Oval Office - consumers look to be now dealing with that a little bit more ... That's been helped by the fact the economy is growing.

She added that last year "44% of consumers would have said to us that they are holding back on spending because they don't know what way economic policy is going to go. That's now down to one in three.

"On the business side Brexit is still a worry and we see that coming through. That said, if you look over the next one to three years, we do have about two thirds of businesses indicating they do plan on expanding."

Ms O'Sullivan also discussed the lender's stats on house-price sentiment from the Economic Pulse.

She said most people expect rises of more than 5% in the next year.

On reluctance to buy, she said: "One of the key barriers to buying is the rising prices, that's particularly the case in Dublin. People in Dublin think it's not as good a time to buy as people in the rest of the country."