The combination of high inflation and under-pressure profits is creating a wider spread of pay deals, analysts have found.

The latest IDS Pay Databank figures have found pay settlements are rising in some sectors but staying low in others.

Of the new deals the group recorded in the three months to July, almost half (47 per cent) are worth four per cent or higher, and one-tenth are at five per cent or above.

However, there are plenty of lower-end deals, with the median for the private services sector – which includes retail and not-for-profit groups – falling slightly to 3.4 per cent.

This means the median for private sector pay deals stands at 3.8 per cent, as in previous months.

There were six public sector awards between May and July, including one for firefighters, which gave them a rise of 2.45 per cent from July. Other public sector awards were mainly centred on three per cent.

Overall, pay deals for the period were around 3.5 per cent.

Ken Mulkearn, editor of IDS Pay Report, said: “Higher and rising inflation is having an effect on pay negotiations in the private sector, but pressure on profits is also a key part of the picture as the economic outlook worsens.

“These contradictory pressures will be foremost in the minds of decision-makers as they plan ahead for 2009 pay reviews.”

There were a total of 57 settlements effective in the three months to the end of July, which together cover a total of 1.63 million employees.