Statistics published by the Chartered Institute of Public Finance & Accountancy show that the average council tax bill in England will rise by 3.9%, compared to last year's average hike of 4.2%.
The average council tax bill will increase by£52 this year, with a typical band D bill expected to be£1,373.
'Testament to local councils'
The provisional figures have been published against the backdrop of a tight central government funding settlement for local authorities, creeping inflation and rising living costs.
Local Government Association chairman Sir Simon Milton (Con) claimed the increases would have been lower had the government's finance settlement had been more generous.
He added: "It is a testament to the determination of councils that the average rise is likely to be close to the rate of inflation".
Wide regional differences
But CIPFA says the figures mask wide regional differences, with council tax demands in the south-west rising by£61, compared to only£22 in central London.
Councils in greater London posted some of the lowest average increases, both with average 2.7% rises, well below the Retail Price Index measure of inflation at 4.1%. At the other end of the spectrum, the south-west saw the biggest increases with 4.5%.
CIPFA chief executive Steve Freer said: “The dominant factor influencing this year’s council tax decisions is the threat of capping by government.
"The minister has emphasised that he expects the average increase to be less than five percent and will no doubt be encouraged that our survey points to an actual average of 3.9% across the country."
But he warned that councils could be forced to reduce some services. “Councils will be redoubling their efforts to make efficiency savings to balance tight budgets. But where there’s still a gap to bridge there is every likelihood that some service levels will have to be reduced,” Mr Freer said.