Pay rises are set to slow to their smallest for three years, data from the Chartered Institute of Personnel and Development has indicated.
Companies have pencilled in rises of around 3% for the coming year, down from 4% three months ago.
Pay growth is a key determinant in the Bank of England’s thinking over interest rates. The central bank cut rates on 1 August for the first time in four years.
A separate survey from the bank earlier this month showed firms had pencilled pay rises of 4.1%, the lowest in at least two years.
"Falls in expected pay rises were anticipated now inflation is within a tolerable range for employees,” said CIPD economist James Cockett.
The CIPD survey was based on a survey of 2,032 employers across the private, public and voluntary sectors between June 17 and July 4.
Private sector pay excluding bonuses was 5.6% higher in the three months to the end of May, its smallest rise since June 2022, according to official figures.
Economists though still question whether the level of pay rises has fallen sufficiently to justify another round of rate cuts.
Official data due on Tuesday will show pay growth for the second quarter of 2024, while figures on Wednesday are likely to show inflation rising back above its 2% target as the impact of lower energy prices fades.
Elizabeth Martins, UK economist at HSBC, said: “We see no urgent case for a follow-up rate cut.”