UK inflation slowed from a 41-year high of 11.1% to 10.7% in November.
Pay awards by British employers held at 5% for the second month in a row in December, well below annual inflation of close to 11%, data from human resources company XpertHR showed on Wednesday.
UK inflation slowed from a 41-year high of 11.1% to 10.7% in November 2022, but the Bank of England is concerned that double-digit price rises could be harder to tame if pay deals keep growing.
The latest inflation data is due to be published later on Wednesday. Economist polled by Reuters expect prices rises to have eased to 10.5% in December.
Fresh figures from the Office for National Statistics showed wage growth ticked up again in the quarter to November. Average earnings excluding bonuses were 6.4% higher than a year previously - the biggest increase since record began in 2001.
The BoE's Monetary Policy Committee is expected to deliver its 10th consecutive interest rate hike, up from 3.5% to 4% at its next meeting in February.
XpertHR senior content manager Sheila Attwood said employers should seek to support workers better in the face of a recession and as the cost of living crisis continued to be a key factor for firms setting pay.
The squeeze on living standards has seen workers across Britain including nurses, teachers and public transport staff stage a series of strikes.
"We have noted previously that several organisations have made off-cycle pay awards to help employees deal with the cost-of-living crisis," Attwood said.
“It will be interesting to see if this continues into 2023 or whether the forecasted fall in inflation from the middle of next year, together with the current 5% median pay award becoming the norm as we predict, will obviate the need for such measures."
Looking at the 12 months to the end of December, the median pay deal was 4% in the private sector and 3.8% in the public sector – a jump from 1.4% in 2021.
(Reporting by Suban Abdulla, editing by Andy Bruce)
UK Pay Deals Hold At 5% For Second Month As Wages Lag Inflation - XpertHR