Average pay rises have remained at two per cent in recent months, below the rate of inflation, while wage freezes have fallen to around one in 10 of all settlements, new research shows.

A study of 69 agreements in the quarter to October, covering almost two million workers, revealed that most employers gave increases of between two per cent and three per cent.

Pay analysts IDS said wage freezes were almost as rare now as deals worth over four per cent.

The latest figures included the 2.2 per cent increase in the national minimum wage last month, which influenced awards in low-paying sectors.

Ken Mulkearn, editor of IDS Pay Report, said: “As we prepare to turn the corner into 2011, there are a number of competing pressures – both upward and downward – on pay.

“Affordability and cost pressures loom large, but inflation is likely to increase in importance as employees’ energy bills rise, rail fares rise and the increase in VAT comes into effect in January.”

RPI inflation is currently 4.6 per cent, while CPI inflation is running at 3.2 per cent.