Average earnings has increased by 2.8% in the three months to February, which is above inflation for the first time in nearly a year, official figures show.
The inflation slowdown is expected to ease the pressure over the household income squeeze.
Average wages excluding bonuses were up by 2.8% in the three months to the end of February, growing at a faster rate than CPI inflation for the first time in a year.
Its latest forecasts in February indicated inflation would only fall to 2.5pc in the second half of this year. Investors had expected inflation to hold at the 2.7% level. Retailers have been struggling since the 2016 Brexit vote pushed the value of the pound down, and the cost of living rose.
The wage figures may reinforce speculation that the Bank of England will raise interest rates again next month, despite the economy being disrupted by bad weather in the first quarter.
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Brettell added that the interplay between wages and prices will be interesting over the coming months.
Official data published today showed annual consumer price inflation fell to 2.5% from 2.7% in February.
Inflation started to overtake wages in February past year, squeezing incomes.
ONS head of inflation Mike Hardie said: "Growth in the price of goods leaving factories continued to slow, mainly due to a smaller increase in the price of food products compared with this time previous year".
In contrast, Pantheon Macroeconomics argues that inflation undershooting BoE forecasts 'suggests that investors have concluded too hastily that a May rate hike is a done deal.' It adds the decline in inflation reduces the BoE's need to raise rates a few times this year. Figures showed air transport falling 2.1 per cent month on month, a smaller decline than the 3.9 per cent fall in March 2017.
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Neil Birrell, chief investment officer at Premier Asset Management, said: "Overall, this is likely to impact interest rate expectations".
At the pumps, motorists also faced lower fuel costs last month, with petrol down by 1.6p per litre on the month to 119.2p per litre.
The Bank of England will raise its key interest rate to 0.75 percent in May, said almost all of 76 economists polled by Reuters, with another 25 basis point rise expected just before Britain is due to leave the European Union early next year.
As well as expectations of higher interest rates, the currency has been buoyed by waning concerns over Brexit after the British government agreed on the outlines of a transition deal with the European Union after it leaves in March 2019.
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