Employers in the UK scaled back the annual pay settlements they offered to staff at the start of 2024, a move that is expected to comfort Bank of England underlying inflationary pressures.

The survey, conducted by human resources data firm XpertHR, found a median pay settlement of 5.1%, down from 6% in the October-December period, according to 57 pay awards covering over 180,000 employees.

“Around half of employee groups are receiving settlements worth less than their previous award, where high awards were provided to account for the rising cost of living affecting UK employees at the end of 2022 and throughout 2023,” said Sheila Attwood, senior content manager at XpertHR.

The news agency Reuters reported that this fall in pay settlements alongside recent sharp drops in the headline rate of consumer price inflation matches comments from Bank of England Deputy Governor Ben Broadbent, who said he believes that recent very high wage growth reflects high inflation rather than underlying shortages.

According to official data, average wages, including bonuses, increased by 6.2% last year, less than half of what they were in mid-2023, and more than double the rate of pay growth that the Bank of England believes is consistent with keeping inflation at its target of 2%.