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The news comes as the Office for National Statistics confirms that the Retail Price Index (RPI) has fallen below zero for the first time in almost 50 years, reports the Times.
It is also expected that the Consumer Prices Index will show that prices have risen by 2.6 per cent.
The data is likely to fuel concerns that the UK is heading for a damaging period of deflation.
Public sector pay is tied to the RPI and accounts for around 25 per cent of government spending.
The fall in the RPI is largely the result of plummeting mortgage repayments following a number of cuts in interest rates.
A spokesman for public sector union Unison commented: "Cutting pay awards of health workers will do nothing to help improve recruitment and retention, which is a real long-term problem in the NHS."
