mnemonic, I would agree, that is a joke, and would have annoyed me too.
Of course a lot of companies are taking a hard line on salary increases at the moment, but the excuse you've been given is obviously rubbish. I suppose when there's a focus on minimising pay increases they think someone who's already had a pay rise that year is least likely to complain about not getting another rise, but this approach ignores the fact that your market value as an employee has just jumped up because you've qualified (which is why they gave you the qualification increase), as well as you gaining another year of experience (which is why you'd normally expect an annual increase, as well as to counter the effect of inflation).
I suspect if you were to go and get a job offer elsewhere for more money, they'll suddenly reconsider, what with recruitment costs etc, and make you a counteroffer. Ultimately, if you can't negotiate with them, this is all you can do I suppose. At least if you have a chat with a recruiter they could give you some feedback as to how your current salary compares with what's avaialble given your experience etc.