UK pay awards stall at 3% as inflation pressure builds
The latest data from Brightmine, the HR data and insights provider, reveals that the median basic pay award has eased back to 3% for the three months to the end of April 2026, even as inflation has risen to 3.3%.
The findings suggest that pay growth is moving back to 3%, marking a clear return of the rate seen across 2025. With inflation continuing to increase costs across businesses, employers are taking a more cautious and controlled approach to pay decisions, balancing competitiveness and retention against affordability.
Employers maintain restraint amid inflation and cost pressures
The latest pay settlements reflect the continued pressure facing employers in a challenging economic environment. The Bank of England held interest rates at 3.75% in April, and while GDP showed strong growth of 0.3% in March, ithe outlook remains subdued, particularly as the economic impacts of the Iran conflict feeds through.
Organisations also remain under pressure from higher operating costs and increased statutory wage rates introduced in April, further limiting scope for larger pay awards.
Sheila Attwood, Senior Content Manager, Data and HR Insights at Brightmine, comments: “The return to a 3% median pay award suggests that many organisations are settling into a more sustainable pay position after several years of elevated settlements.
“Although inflation pressures have not disappeared, employers are clearly weighing those concerns against affordability constraints and a weaker labour market outlook. The fact that almost half of organisations are awarding lower increases than last year highlights the continued emphasis on pay restraint during 2026.”
– Sheila Atwood, Senior Content Manager, Data and HR Insights, Brightmine
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