British employers have given staff their joint-lowest pay increases since June 2022, with median pay rises of 4% in the three months leading to the end of August, according to new figures released on Tuesday by human resources data company Brightmine.

The 4% increase, which aligns with other pay surveys and official data, reflects a continued slowdown in pay growth as inflation nears the Bank of England’s 2% target. This easing of pay awards follows a period of high inflation, which had driven employers to offer larger wage increases last year to offset rising living costs.

“Employers that have made pay awards so far this year have already reacted to the falling inflation environment by putting in place lower pay awards than last year,” said Sheila Attwood, senior content manager at Brightmine.

The median 4% pay rise in the three months to August mirrors the figure for the three months to July, which had been revised down from an earlier estimate of 4.5%. Official data also showed that growth in average weekly earnings, excluding bonuses, was the slowest in over two years, coming in at 5.1% in the three months to July.

The Bank of England (BoE) is closely monitoring wage growth as part of its efforts to assess whether inflationary pressures are sufficiently weakening to allow for future cuts to interest rates. A BoE survey of businesses covering the three months to August indicated that employers expected to raise wages by 4.1% over the next 12 months, further reinforcing the downward trend in pay awards.

Brightmine’s report, which analysed 67 pay awards covering approximately 900,000 employees, adds to growing evidence that employers are adjusting to a lower inflation environment by tempering wage increases. This marks a shift from last year when higher inflation prompted companies to offer larger pay raises to retain staff.

With inflation now under control and wage growth slowing, the Bank of England will be looking for additional signs of easing inflationary pressures before considering any further interest rate cuts. However, the recent moderation in pay awards suggests that employers are already responding to the more stable economic outlook.