The average level of pay deals has fallen slightly in the past few months to 3.2%, according to the latest report by Incomes Data Services.

The study of 54 settlements in the three months to September showed a fall from the 3.3% average in the quarter to August.

Report editor, Ken Mulkearn, says: "Pay settlement levels have not kept pace with the general trend of high inflation this year.

"Our latest analysis of settlement figures show the median levels dipping slightly, although a significant number of deals in the private sector are at 4% or more."