Wages have grown at a higher rate than inflation for the first time in more than a year, figures from the Office for National Statistics (ONS) show.
While wages grew at an annual rate of 2.9% in the 3 months to March 2018, the inflation rate was 2.7% over the same period.
This marked the end of a pay squeeze that began in February 2017, when the rate of inflation started to overtake salary growth.
However, estimates separately released by the ONS showed productivity fell 0.5% in the same quarter.
The British Chambers of Commerce (BCC) warned that this decline shows wage growth “should not be taken for granted”.
Suren Thiru, head of economics at the BCC, said:
“While businesses are reporting some upward pressure on pay, sluggish productivity and high upfront business costs are restricting the extent to which wages are able to rise.
“More needs to be done to support firms looking to recruit and grow their business, including tackling the high input costs faced by businesses and addressing the chronic labour shortages that continue to undermine the UK growth prospects.